Accounting 201 Exam 1

yepapeju's version from 2017-09-25 22:59


Question Answer
debitleft side of an account
expensecost of operating a business; a decrease in stockholder's equity
net incomerevenues minus expenses
ledgergrouping of accounts
postingcopying data from the journal to the ledger
normal balanceside of an account where increases are recorded
payablealways a liability
journalleft side of an account
receivablealways and asset
owner's equityassets minus liabilities
financial accountingprovides information for people outside the company
management accounting provides information for people inside the company
propietorshiptype of business in which business is legally separate from owner
partnershiptype of business with more than one owner. each personally responsible for business debts
corporationowners called stockholders who elect board of trustees who are responsible for running business and appointing top executives. stockholders pay income tax on dividends
Limited Liability Companyowners are called members, less inherent risk since if business fails, members don't have to pay business debts. no income tax for business
entity assumptionassumption that business is separate economic unit from owner
continuity (going-concern) assumptionassumes entity will continue to exist indefinitely
historical cost principleassumes assets are recorded at purchase price
stable monetary unit assumptionassumes there is no hyperinflation
income statementmeasures operating performance for a given period. reports revenues or expenses and the resulting net income or loss
statement of retained earningsshows increases or decreases to retained earnings for a period of time
balance sheetmeasures financial position of a company as of a certain date. reports assets, liabilities, and stockholder's equity,
statement of cash flowsshows inflows and outflows of cash for a certain period. divided into 3 categories: operating expenses, investment expenses, financing expenses