Chapter 4 and 5 Flashcards Preview

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Flashcards in Chapter 4 and 5 Deck (26):
1

chart of accounts

a list of all accounts

2

how do we number accounts in the chart of account?

1. Assets
2. Liabilities
3. Owner's Equity
4. Revenue
5. Expenses

3

Double entry accounting

each transaction affects at least two accounts

4

debit is on the _____, credit is on the ______.

left, right.

5

Asset
------------
|
|
|

Asset
------------
+ | -
|
|

6

Liability
------------
|
|
|

Liability
------------
- | +
|
|

7

Owner's
Equity
------------
|
|
|

Owner's
Equity
------------
(-) | +
|
| investment

(-) = owners capital

8

Owners
Withdrawals
------------
|
|
|

Owners
Withdrawals
------------
+ |
|
|

9

Expenses
------------
|
|
|

Expenses
------------
+ |
|
|

10

Revenue
------------
|
|
|

Revenue
------------
| +
|
|

11

where are normal balances found?

on the increase side of an account

12

revenue (fees earned)

increases in OE as a result of selling goods or providing service (only a credit)

13

expenses

every time you pay a cost of operating a business the expenses go up (accumulates) so if you pay rent


Rent. Exp. Cash
---------- -------
+| |-
| |

14

owner drawing

treated like an expense- only a debit accumulates

Owner D. Cash
---------- -------
+| |-
| |

15

temporary capital accounts

revenue, expense, and withdrawals accounts are used to collect information for a single accounting period

16

permanent accounts

continuous from one accounting period to the next

17

name the three basic parts to a T account

classification, account, debit/credit

18

what are the six steps involved in analyzing a business transaction?

1. identify accounts affected

2. classify accounts affected

3. determine account of increase or decrease for each account affected

4. which account is debited? for what amount?

5. which account is credited? for what amount?

6. what is the complete entry in T-accounts forms?

19

account

shows the specific balance for any item

20

new accounting equation

A = L + OC + R - OwD - E

21

how do you set up a trial balance?

Business Name
-----------------
Trial Balance
Date

22

what are the two accounts affected ?

paid Floral Fixtures a portion of the amount owed for furniture purchased earlier in the month, $2,500

A/P, name - debit, $2,500
Cash - credit, $2,500

23

which accounts are affected?

you received $350 for the service provided in transaction #8

cash - debit, $350
A/R - credit, $350

24

what the acronym for T - accounts?

ALOeOdER

25

what's the acronym for chart accounts ?

ALORE

26

T is the letter...

T