Flashcards
Basic terms of accounting
Cards in this deck (38)
- 1Accounting EquationAssets= Liabilities + Stockholders' Equity
- 2Accounts payableAmounts owed to suppliers for goods or services purchased on credit.
- 3Accounts recievableAmounts due from customers for services already provided
- 4AssetsThings of value owned by the business. Examples include cash, machines, and buildings. To their owners, assets possess service potential or utility that can be measured and expressed in money terms
- 5Balance sheetFinancial statement that lists a company’s assets, liabilities, and stockholders’ equity as of a specific moment in time. Also called a statement of financial position
- 6Business entity concept (or accounting entity concept)The separate existence of the business organization
- 7Capital stockThe title given to an equity account showing the investment in a business corporation by its stockholders
- 8ContinuityKontinuiteit
- 9CorporationBusiness incorporated under the laws of one of the states and owned by a few stockholders or by thousands of stockholders
- 10CostSacrifice made or the resources given up, measured in money terms, to acquire some desired thing, such as a new truck (asset).
- 11DividendPayment (usually of cash) to the owners of a corporation; it is a distribution of income to owners rather than an expense of doing business
- 12EntityA business unit that is deemed to have an existence separate and apart from its owners, creditors, employees, customers, other interested parties, and other businesses, and for which accounting records are maintained
- 13EquitiesBroadly speaking, all claims to, or interests in, assets; includes liabilities and stockholders’ equity
- 14Equity ratioA ratio found by dividing stockholders’ equity by total equities (or total assets)
- 15Exchange-price (or cost) concept (principle)The objective money prices determined in the exchange process are used to record most assets
- 16ExpensesCosts incurred to produce revenues, measured by the assets surrendered or consumed in serving customers
- 17Going-concern (continuity) conceptThe assumption by the accountant that unless strong evidence exists to the contrary, a business entity will continue operations into the indefinite future
- 18Income statementFinancial statement that shows the revenues and expenses and reports the profitability of a business organization for a stated period of time. Sometimes called an earnings statement
- 19LiabilitiesDebts owed by a business—or creditors’ equity. Examples: notes payable, accounts payable
- 20Manufacturing companiesCompanies that buy materials, convert them into products, and then sell the products to other companies or to final customers
- 21Merchandising companiesCompanies that purchase goods ready for sale and sell them to customers
- 22Money measurement conceptRecording and reporting economic activity in a common monetary unit of measure such as the dollar
- 23Net incomeAmount by which the revenues of a period exceed the expenses of the same period
- 24Net lossAmount by which the expenses of a period exceed the revenues of the same period
- 25Notes payableAmounts owed to parties who loan the company money after the owner signs a written agreement (a note) for the company to repay.
- 26PartnershipAn unincorporated business owned by two or more persons associated as partners
- 27Periodicity (time periods) conceptAn assumption that an entity’s life can be meaningfully subdivided into time periods (such as months or years) for purposes of reporting its economic activities
- 28ProfitabilityAbility to generate income. The income statement reflects a company’s profitability. Retained earnings - Accumulated net income less dividend distributions to stockholders
- 29RevenuesInflows of assets (such as cash) resulting from the sale of products or the rendering of services to customers.
- 30Service companiesCompanies (such as accounting firms, law firms, or dry cleaning establishments) that perform services for a fee
- 31Single proprietorshipAn unincorporated business owned by an individual and often managed by that individual
- 32SolvencyAbility to pay debts as they become due. The balance sheet reflects a company’s solvency
- 33Source documentAny written or printed evidence of a business transaction that describes the essential facts of that transaction, such as receipts for cash paid or received
- 34Statement of cash flowsFinancial statement showing cash inflows and outflows for a company over a period of time
- 35Statement of retained earningsFinancial statement used to explain the changes in retained earnings that occurred between two balance sheet dates
- 36Stockholders’ equityThe owners’ interest in a corporation. Stockholders or shareholders - Owners of a corporation; they buy shares of stock, which are units of ownership, in the corporation.
- 37Summary of transactionsTeaching tool to show the effects of transactions on the accounting equation
- 38TransactionA business activity or event that causes a measurable change in the items in the accounting equation, Assets = Liabilities + Stockholders’ equity
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- Accounting Flashcards on Basic terms of accounting, created by Rochelle Blaauw on 22/01/2017.
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- Rochelle Blaauw
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