Accounting Foundations: Bookkeeping Flashcards
Terms from LinkedIn Learning course (32 cards)
The preservation of a systematic, quantitative record of an activity; provides information so individuals can make decisions.
Bookkeeping
Assets = Liabilities + Equity
Accounting Equation
One of a company’s core financial statements that reports a company’s assets, liabilities and shareholders’ equity. It is a summary of the financial balances of an individual or organization.
The Balance Sheet
One of a company’s core financial statements that shows the company’s revenues and expenses during a particular period. Also referred to as a P&L statement or statement of operations (Revenues - Expenses = Net Income/Loss).
The Income Statement
One of a company’s core financial statements that summarizes the amount of cash and cash equivalents entering and leaving a company. It measures how well a company manages its cash position and breaks the analysis down to operating, investing, and financing activities.
The Statement of Cash Flows
The amount of assets generated in doing business (cash, receivables, etc.).
Revenue
The amount of assets consumed in doing business (rent, wages paid, etc.).
Expenses
The net amount of assets generated by a business during it’s business operations.
Net Income
Are the core activities that a business performs to earn revenue; usually refers to the first section of the statement of cash flows.
*** includes cash collection from sales and cash paid for expenses such as rent, wages, taxes, utilities, etc.
Operating Activities
The purchase and sale of LT assets and other business investments (such as securities), within a specific reporting period; usually refers to the second section of the statement of cash flows.
Investing Activities
Transactions involving debt, equity, and dividends; usually refers to the third section of the statement of cash flows.
*** includes borrowing money, repaying loans, managing new investments, paying DIV; etc.
Financing Activities
LT expenses incurred to acquire or upgrade or maintain the tangible assets like plants, machinery, buildings, etc.
Capital Expenditures
ST expenses incurred to maintain day to day functioning of an organization.
Revenue Expenditures
A specific accounting record that provides an efficient way to categorize similar transactions.
Account
Cash, inventory, and equipment are examples of which part of the accounting equation?
Assets
Accounts payable and notes payable are examples of which part of the accounting equation?
Liabilities
Paid-in capital (capital stock for corps) and retained earnings are examples of which part of the accounting equation?
Owner’s Equity
An abbreviated representation of an actual account.
T-Account
Refers to the left side of the T-account.
*** Note that is takes on additional meaning when coupled with specific accounts.
Debit (DR)
Refers to the right side of the T-account.
*** Note that is takes on additional meaning when coupled with specific accounts.
Credit (CR)
debits = increases
credits = decreases
*** accounts from this part of the accounting equation will usually have a debit balance
Assets
debits = decreases
credits = increases
*** accounts from these 2 parts of the accounting equation will usually have a credit balance
Liabilities & Owner’s Equity
Resources owned or controlled by a company that will provide probable future benefit.
Assets
A journal entry with more than one debit or more than one credit per transaction.
Compound Journal Entry
