Chapter 2 Financial Accounting Flashcards Preview

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Flashcards in Chapter 2 Financial Accounting Deck (29):
1

Transactions

Any event that impacts the financial position of a business

2

Where are amounts posted?

To the Ledger

3

What are 3 examples of common liability accounts?

Accounts Payable
Notes Payable
Accrued Liabilities

4

Expenses

Costs of operating a business

5

What are 3 examples of debits?

Assets
Dividends
Expenses

6

What are 2 other names for common stock

Capital stock
Paid in Capital

7

Accrued Liabilities

Expenses that have not been paid

8

What must always happen in a journal entry?

Debits must equal credits

9

What does every transaction have?

A debit and a credit

10

What are 4 examples of Equity Accounts?

Common Stock
Retained Earnings
Revenue
Expenses

11

What are 9 examples of common asset accounts?

Cash
Accounts Receivable
Notes Receivable
Inventory
Prepaid expenses
Land
Buildings
Equipment
Furniture and Fixtures

12

What are the 2 reasons why prepaid expenses are assets?

Has the prefix pre which means before
Provides a future benefit

13

Debit increases in what 3 things? (ADE)

Assets
Dividends
Expenses

14

Posting

Transferring information from the journal to the ledger

15

Revenues

Earned by providing goods or services

16

What are revenues not?

Cash

17

Double-entry accounting

Each transaction affects at least 2 accounts

18

Prepaid expenses

Expenses paid for in advance

19

What kind of industry does not have inventory?

Service Based Industries

20

The Account

Record of all changes in a particular asset, liability or equity

21

What are the 2 sides of a transaction?

Business gives something
Business receives something

22

What are expenses not?

Cash

23

What 2 terms are neutral

Debit
Credit

24

What are 2 examples of cash?

Credit Card
Debit Card

25

The Journal

Chronological records of transactions

26

What are three steps to journaling?

-Identify accounts impacted by transaction
-Apply debit / credit rules for the increase or decrease in the accounts
- Record transactions in journal

27

Where are transactions recorded?

In Journal

28

Credit increases in what 3 things?

Liabilities
Revenue
Common Stock
Retained Earnings

29

Inventory

Products held for sale

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