Unit 4/5 Flashcards Preview

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Flashcards in Unit 4/5 Deck (22)
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1

net loss

when expenses are greater than revenue

2

fiscal period

an accounting period that is one year in length

3

owner's drawing account

records the withdrawal of assets from the business by the owner

ex. owner's salary

4

matching principle

costs and the sponsors should be matched with the revenue they help generate during the same accounting period

5

prepare a report form balance sheet

y

6

income statement

a financial statement that presents revenue, expenses, and net income (or net loss) for a specific period of time

7

expenses

costs of items or services used up in the operation of a business

8

net loss ____________ owner's equity

decreases

9

for the _______ ended _______

for income statement heading

10

net income ________ owner's equity

increases

11

revenue recognition principle

states that revenue is recognized at the time the revenue is earned (even if cash is not received)

12

assets increase on the ______ side and decrease in the _______ side

debit

credit

13

revenue

amounts earned from the sale of goods or services during the operation of a business

14

time period principle

requires the definition and use of the same period of time for each accounting period

15

fiscal year

the twelve month period from January 1 to December 31

16

liabilities and capital increase on the ________ side and decrease on the _______ side

credit

debit

17

accounting period

the period of time covered by the financial statement

18

accrual basis of accounting

when a business records revenue when earned and expenses when incurred

19

the balance sheet

a statement the presents the assets, liabilities, and owner's equity

20

net income

when revenue is greater than expenses

21

prepare an income statement

y

22

cash basis of accounting

recognizes revenue and expenses only when cash changes hands

(not for use by business)