Accounting test 1-c

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created 7 years ago by lsudduth
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1

Amount by which the business assets exceed the business liabilities.

net worth or capital

2

Once the debts are paid, the remaining assets belong to

the owner's equtity

(assets - liability = owner's equity)

3

The amount a business charges customers for products sold or services performed

revenues

(Increases both assets (cash or accounts receivable) and owner’s equity)

4

Represent the decrease in assets (or increase in liabilities) as a result of efforts made to produce revenues

expenses

(Either decrease assets or increase liabilities, but ALWAYS decrease owner’s equity)

5

REVENUE greater than EXPENSES is

NET INCOME

6

EXPENSES greater than REVENUE is

NET LOSS

7

Any accounting period of 12 months is called

fiscal year

8

an expense will increase the expense account but what does it do to the OWNER,s EQUITY account

cause an overall DECREASE In

9

statement that reports the profitability of business operations for a specific period of time by subtracting expenses from the revenue to determine net income/loss

INCOME STATEMENT

(Also called the profit and loss statement or operating statement)

10

Financial statement headings:

1st line: The name of the company
2nd line: The title of the statement
3rd line: The time period covered or the
date of the statement

11

Income Statements first item on the top line should include ?

$ (dollar sign)

12

Income Statements layouts

1st column - account
2nd column - listing items to be totaled
3re column - totals

13

order of listings for income statement:

...

14

Reports the activities that affected owner’s equity for a specific period of time

The Statement Of Owner’s Equity

15

where do you get the net income total to complete statement of Owner’s Equity

Net Income from the income statement

16

this statement uses the net effect (net income/loss) from the income statement

Statement of Owner’s Equity

17

STATEMENT OF OWNER'S EQUITY LAYOUT

(starting at first line)

18

(cont.)

(cont.)

19

The Balance Sheet

(Also referred to as a statement of financial position or statement of financial condition)

Confirms the accounting equation has remained in balance

20

Assets on left side of page and liabilities and owner's equity on the right side

bottom line shows total assets on the left side and total liabilities & owner's equity displayed same on right side ($ & ===)

21

the two sides should show the same final number to show the equation is in balance still

...

22

what are the three basic phases of the accounting process

Input, Processing, & Output

23

Input

Transactions provide the necessary input

24

Processing

Identify accounts
Classify accounts
Determine whether increase or decrease?
Enter transaction and verify balance

25

Output

INCOME STATEMENT
STATEMENT OF OWNER’S EQUITY
BALANCE SHEET

26

INCOME STATEMENT

REVENUES - EXPENSES = NET INCOME

27

STATEMENT OF OWNER’S EQUITY

BEG.CAPITAL + INVEST. + NET INCOME - W/DRAWALS =
ENDING CAPITAL

(NET INCOME AMOUNT FROM INCOME STATEMENT TOTAL)

28

BALANCE SHEET

ASSETS = LIABILITIES + OWNER’S EQUITY

(Owners Equity is the Ending Capital)