Intro To Accounting Flashcards
(25 cards)
What is accounting?
Accounting is the process of recording, classifying, and summarizing financial transactions to provide useful information for decision-making.
What are the main objectives of accounting?
The main objectives of accounting are to maintain records, ascertain profit or loss, and provide financial information to stakeholders.
True or False: Accounting is only concerned with financial transactions.
True
Fill in the blank: Accounting provides information for _____ decision-making.
economic
What are the two main branches of accounting?
The two main branches of accounting are financial accounting and management accounting.
What is financial accounting?
Financial accounting involves recording and reporting financial transactions for external users.
What is management accounting?
Management accounting focuses on providing information to internal users for decision-making purposes.
What is a ledger?
A ledger is a book or digital record where all financial transactions are recorded in accounts.
What is the accounting equation?
The accounting equation is Assets = Liabilities + Equity.
True or False: Equity represents the owner’s interest in the business.
True
What is a trial balance?
A trial balance is a statement that lists all the balances of the general ledger accounts to ensure that total debits equal total credits.
What is the purpose of a cash flow statement?
A cash flow statement shows the inflows and outflows of cash within a business during a specific period.
Multiple Choice: Which of the following is NOT a financial statement? A) Balance Sheet B) Income Statement C) Cash Flow Statement D) Ledger
D) Ledger
What is the difference between revenue and profit?
Revenue is the total income generated from sales, while profit is the income remaining after all expenses are deducted.
True or False: Depreciation is a method of allocating the cost of a tangible asset over its useful life.
True
What is double-entry accounting?
Double-entry accounting is a system where every transaction affects at least two accounts, maintaining the accounting equation.
What does GAAP stand for?
GAAP stands for Generally Accepted Accounting Principles.
Fill in the blank: The _____ principle requires that revenue is recognized when earned, regardless of cash receipt.
revenue
What is an account?
An account is a record of all transactions related to a specific asset, liability, equity, revenue, or expense.
What is the purpose of the income statement?
The income statement shows a company’s revenues and expenses over a specific period, resulting in net profit or loss.
True or False: Assets are resources owned by a business.
True
What is an expense?
An expense is a cost incurred in the process of generating revenue.
What is a journal?
A journal is a chronological record of all financial transactions before they are posted to the ledger.
Multiple Choice: Which of the following is an example of a liability? A) Cash B) Accounts Payable C) Inventory D) Capital
B) Accounts Payable
