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43 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Accounting |
Takes data from source documents and turns into meaningful info |
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6 Account Categories |
Assets, liabilities, equity, revenue, expenses, drawings |
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Assets |
Items a company uses to produce future revenue |
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Expense |
Cost incurred to help produce revenue |
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Liabilities |
A company's debt |
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Drawing |
Money taken out of a business by it's sole owner |
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Revenue |
What a company earns when it sells a product or service |
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Capital / Equity |
Level of ownership in a business |
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After Eating Dinner, Larry Read Comics |
Assets, Expenses, Drawing, liabilities, revenue, capital |
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3 things to analyze |
Which accounts, what amounts, whether to credit or debit |
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General Journal |
Where journal entries are written |
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Ledger |
Where account transactions for an individual account are recorded |
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General Ledger |
Book containing all of the account ledgers |
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Trial balance |
Proves ONLY the equality of debits and credits, NOT correct analysis, proper recording, omitted entries or whether proper amounts were entered |
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Worksheet |
Informal tool used to find any errors quickly |
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Items in worksheet |
Trial balance, adjustment to ledger balances, adjusted trial balance, financial statement and account balances |
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Adjusting Journal Entries |
Used to account for rev or exp that affect more than one period (July rent paid in June) |
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Realization Principle |
Revenue recorded when EARNED |
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Matching Principle |
Expenses recorded when INCURRED |
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Balance Sheet |
Lists balances of Asset, Liability and Equity/ Capital (A = L + E) |
Too much A.L.E. makes you lose your balance |
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Classified Balance Sheet (Asset Groups) |
Current Assets, Property Plant & Equipment, and Long term assets |
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Classified Balance Sheet (Liability groups) |
Current Liabilities, Long term Liabilities |
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Income Statement |
Lists period ending balances for revenue and expense categories |
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Net Income |
Revenue - Expense |
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Single Step Income Statement |
Shows revenue - expenses = net income in summary format |
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Multi step Income Statement |
Shows four sections Revenue, costs of goods sold, operating expenses, other expense |
Statement of Profit & Loss, statement of operations |
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Statement of Retained Earnings |
Explains changes in owners investment . Related to income statement. Net Income increases, net loss decreases |
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Ending Retained Earnings |
Beginning R.E. + Net Income - Dividend Payments |
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Statement of Cash Flows |
Summarized the company's cash receipts and payments over period |
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Cash Inflow/Outflow Categories |
Operating, Investing and Financing |
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Closing Journal Entries |
Resets Rev and Exp to 0 by transferring to "Income Summary", which is closed into Retained Earnings |
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Accounting Cycle |
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Depreciation |
Recording the cost of long term fixed assets used up or consumed in the production of revenue |
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Causes of Depreciation |
Wear and tear; obsolescence |
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Depreciable Cost |
Cost of the asset minus salvage value |
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Straight Line rate |
1/Life (5 year asset is 1/5 or 20%) |
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Units of Production (Activity) rate |
Depreciable Cost / Total units. Depreciable expense is the above rate times units used. |
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Double declining balance method |
Double the straight line rate |
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Partial Year Depreciation |
Depreciation expense multiplied by (# months used / 12) |
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Sum of Years Digits |
SYD = n (n+1)/2 |
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Direct Write Off |
Journal directly to AR. Debit Bad Debts Expense, Credit AR |
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Balance Sheet Method Bad Debts |
Debit Uncollectable Accounts Expense, Credit Allowance for Doubtful Accounts |
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Income Statement Method Bad debts |
Debit Bad Debts Expense, Credit Allowance for Uncollectable Debts |
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