138714
Description
Flashcards by racheloucks, updated more than 1 year ago
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Created by racheloucks
over 12 years ago
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| Question | Answer |
| Account | a form in which changes caused by transactions are recorded |
| Accounting cycle: | the set of accounting procedures performed in each accounting period. |
| Accounting Period | The period of time covered by the financial statements. AKA "fiscal period" |
| Accural basis of accounting | The system under which revenue is recorded when earned and expenses are recorded when incurred. |
| Balance Sheet Equation | Assets = Liabilities + Owner's Equity |
| Book value | the cost of an asset minus the accumulated depreciation |
| Business Equity Principle: | states that each business is considered a separate entity, and the financial data for the business must be kept separate from the owner's personal financial data. |
| Contra Account | an account that reduces the value of the account it is "linked" to. |
| Cost principle: | States that assets must be shown on the balance sheet using the cost the were purchased for. |
| Credit Invoice (source document) | issued by the seller to the customer for returned goods (for credit) |
| Current ratio: | current assets _______________ current liabilities |
| Debt ratio: | Total Liabilities ________________ Total Assets |
| Declining balance depreciation: | Method of calculating depreciation Book Value = Cost − Accumulated Depreciation Then multiply that by the rate. |
| Double entry accounting: | a system of accounting where debits must equal credits for each transaction |
| Equity ratio: | Owner's Equity ______________ Total Assets |
| General partnership | a partnership where all partners have unlimited liability. |
| GAAP | General Accepted Accounting Principles. Standard accounting rules and guidelines |
| HST | 13% TAX |
| limited partnership: | a form of partnership where there is a limited partner (with limited personal liabilities) and a general partner. |
| Matching Principle: | States that expenses for a fiscal period must match the revenue generated in that same period to give an accurate net income. |
| Principle of Materiality: | states that information that could affect the decisions of users of financial statements should be included when financial statements are prepared. |
| Merchandise Turnover Formula | Cost of Goods Sold __________________ Average Inventory |
| Principle of Objectivity: | States that accounting records should be based on the objective evidence provided by source documents to support the values used in recording transactions. |
| Periodic Inventory Method: | merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period (Has purchase returns) |
| Perpetual Inventory Method: | Requires a continuous record of all merchandise on hand updated when ever a transaction occurs. COGS is an account |
| Petty Cash fund: | an amount of cash used to make small payments. All payments must be matched to a voucher |
| Quick Ratio: | Cash - Accounts Rec. - Stocks/Bonds _______________________________ Current Liabilites |
| Bank Reconciliation Statement: | Brings the banks records into agreement with your own records. |
| Time Period Principle: | The definite and consistent used of the same accounting period. |
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