38298752
Description
Flashcards by Austin Egg, updated more than 1 year ago
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Created by Austin Egg
over 1 year ago
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| Question | Answer |
| Chart of Accounts. | The Chart of Accounts (Account List) is a list of all accounts used to accumulate information about assets, liabilities, owners’ equity, revenues, and expenses. |
| Transactions. | During the accounting period, record transactions with customers, vendors, employees, and owners. |
| Trial Balance. | A Trial Balance is also referred to as an unadjusted Trial Balance because it is prepared before adjustments. A Trial Balance lists each account and the account balance at the end of the accounting period. Prepare a Trial Balance to verify that the accounting system is in balance—total debits should equal total credits. |
| Adjustments. | At the end of the accounting period before preparing financial statements, make any adjustments necessary to bring the accounts up to date. Adjustments are entered in the Journal using debits and credits. (Adjustments were covered in |
| Adjusted Trial Balance. | Prepare an Adjusted Trial Balance (a Trial Balance after adjustments) to verify that the accounting system still balances. |
| Financial Reports. | Prepare financial statements (Profit and Loss, Balance Sheet, and Statement of Cash Flows) for external users and internal users. Prepare management reports. |
| Cash basis. | A sale is recorded when cash is collected from the customer. Expenses are recorded when cash is paid. |
| Accrual basis. | Sales are recorded when the good or service is provided regardless of when the cash is collected from the customer. Expenses are recorded when the cost is incurred or expires, even if the expense has not been paid. |
| Assets | . What a company owns. On the Balance Sheet, assets are recorded at their historical cost, the amount we paid for the asset when we purchased it. Note that historical cost can be different from the market value of the asset, which is the amount the asset is worth now. |
| Liabilities | . What a company owes. Liabilities are obligations that include amounts owed vendors (accounts payable) and bank loans (notes payable). |
| Owners’ equity. | The residual that is left after liabilities are satisfied. Also called net worth, owners’ equity is increased by owners’ contributions and net income. Owners’ equity is decreased by owners’ withdrawals (or dividends) and net losses. |
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