Unit 4/5 Flashcards
(22 cards)
net loss
when expenses are greater than revenue
fiscal period
an accounting period that is one year in length
owner’s drawing account
records the withdrawal of assets from the business by the owner
ex. owner’s salary
matching principle
costs and the sponsors should be matched with the revenue they help generate during the same accounting period
prepare a report form balance sheet
y
income statement
a financial statement that presents revenue, expenses, and net income (or net loss) for a specific period of time
expenses
costs of items or services used up in the operation of a business
net loss ____________ owner’s equity
decreases
for the _______ ended _______
for income statement heading
net income ________ owner’s equity
increases
revenue recognition principle
states that revenue is recognized at the time the revenue is earned (even if cash is not received)
assets increase on the ______ side and decrease in the _______ side
debit
credit
revenue
amounts earned from the sale of goods or services during the operation of a business
time period principle
requires the definition and use of the same period of time for each accounting period
fiscal year
the twelve month period from January 1 to December 31
liabilities and capital increase on the ________ side and decrease on the _______ side
credit
debit
accounting period
the period of time covered by the financial statement
accrual basis of accounting
when a business records revenue when earned and expenses when incurred
the balance sheet
a statement the presents the assets, liabilities, and owner’s equity
net income
when revenue is greater than expenses
prepare an income statement
y
cash basis of accounting
recognizes revenue and expenses only when cash changes hands
not for use by business
