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Key Accounting Concepts Flashcards

Key Accounting Concepts Flashcards
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8th Step in the Accounting Cycle
This step of the accounting cycle occurs at the end of accounting periods and involves closing out accounts.
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5th Step in the Accounting Cycle
During this stage of the accounting cycle, you make any necessary adjustments to accounts, including recording income when earned and expenses when incurred.
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2nd Step in the Accounting Cycle
When working on this step of the accounting cycle you will journalize business transactions by recording them in the general journal.
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4th Step in the Accounting Cycle
You prepare an unadjusted trial balance for the general ledger during this step of the accounting cycle.
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3rd Step in the Accounting Cycle
At this stage in the accounting cycle you will post to the general ledger by recording sales and bills in the appropriate accounts.
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General Journal
An accounting journal used in the accounting cycle to record every financial transaction chronologically.
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Income Statement
This financial report records information about the total expenses and revenues that a company accrues over a given length of time and determines the company's bottom line.
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Net Loss or Net Profit Formula
Total business revenue - total business expenses = net profit or net loss
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Indirect Expenses
Businesses have to pay these expenses to operate; they don't relate directly to a single cost object. Examples can include rent payments, insurance and utilities.
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Direct Expenses
These are expenses that relate directly to cost objects, such as salaries or commissions for employees and payment for delivery of specific goods.
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Cost Object
A term that can refer to any idea that can have measured costs. These can include entire departments, products, employees or services.
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Intangible Assets
These assets can't really be seen and may be hard to measure. The reputation of a business is an example of this kind of asset.
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Tangible Assets
Assets in this category are physical and you can touch or see them. Examples can include furniture or business equipment.
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Interest Payable
These are interest expenses that a company hasn't paid but needs to.
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Interest Revenue
An aspect of accrual accounting that represents income that you would make from investments.
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Salaries Payable
You use this term when referring to wages that employees earn in one accounting period that they're not actually paid until a subsequent accounting period.
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Accounts Receivable
A type of accrued revenue that represents the money that clients owe your company and have not yet paid for services or goods you provided.
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Accrued Revenue
These revenues represent money that a business earns in one accounting period but that they do not receive payment for.
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37 cards in set

Flashcard Content Overview

Working with these flashcards can give you the chance to review the steps of the accounting cycle. You'll also be able to go over direct and indirect expenses, along with tangible and intangible assets. Income statements and T-accounts will also be covered by these cards. Additionally, you'll have the opportunity to focus on some of the generally accepted accounting principles, such as the materiality principle, the conservatism principle, the cost principle and more.

Front
Back
Accrued Revenue
These revenues represent money that a business earns in one accounting period but that they do not receive payment for.
Accounts Receivable
A type of accrued revenue that represents the money that clients owe your company and have not yet paid for services or goods you provided.
Salaries Payable
You use this term when referring to wages that employees earn in one accounting period that they're not actually paid until a subsequent accounting period.
Interest Revenue
An aspect of accrual accounting that represents income that you would make from investments.
Interest Payable
These are interest expenses that a company hasn't paid but needs to.
Tangible Assets
Assets in this category are physical and you can touch or see them. Examples can include furniture or business equipment.
Intangible Assets
These assets can't really be seen and may be hard to measure. The reputation of a business is an example of this kind of asset.
Cost Object
A term that can refer to any idea that can have measured costs. These can include entire departments, products, employees or services.
Direct Expenses
These are expenses that relate directly to cost objects, such as salaries or commissions for employees and payment for delivery of specific goods.
Indirect Expenses
Businesses have to pay these expenses to operate; they don't relate directly to a single cost object. Examples can include rent payments, insurance and utilities.
Net Loss or Net Profit Formula
Total business revenue - total business expenses = net profit or net loss
Income Statement
This financial report records information about the total expenses and revenues that a company accrues over a given length of time and determines the company's bottom line.
General Journal
An accounting journal used in the accounting cycle to record every financial transaction chronologically.
3rd Step in the Accounting Cycle
At this stage in the accounting cycle you will post to the general ledger by recording sales and bills in the appropriate accounts.
4th Step in the Accounting Cycle
You prepare an unadjusted trial balance for the general ledger during this step of the accounting cycle.
2nd Step in the Accounting Cycle
When working on this step of the accounting cycle you will journalize business transactions by recording them in the general journal.
5th Step in the Accounting Cycle
During this stage of the accounting cycle, you make any necessary adjustments to accounts, including recording income when earned and expenses when incurred.
8th Step in the Accounting Cycle
This step of the accounting cycle occurs at the end of accounting periods and involves closing out accounts.
T-Accounts
These are simple visuals that can allow accountants to easily see how transactions affect different accounts.
Credit in T-Accounts
Accountants enter these on a T-account's right side. They serve to raise the accounts for expense, owner's equity and liability, while lowering prepaid expense and asset accounts.
Debits in T-Accounts
You enter these on the left side of T-accounts where they lower liability and equity account balances while raising the prepaid expense and asset balances.
Owner's Equity
We use this term to refer to the amount of money that a business's owner puts into the business to get started and to allow the business to continue running.
Liabilities in Business
You use this term when talking about the things or amounts of money that a business owes.
Current Assets
The specific assets that a business will sell or use in a single year.
Assets in Business
These are the objects that a business owns. They possess value and companies can turn them into cash.
Purpose of Accounting
This practice serves to collect, organize and interpret financial data.
Double-Entry Accounting
A kind of accounting that says that every transaction a business makes must be recorded in at least two separate accounts. It's based on the equation: liabilities + equity = assets.
Going Concern Principle
One of the generally accepted accounting principles. This principle applies if a business plans to keep operating and to not liquidate.
Matching Principle
A generally accepted accounting principle that says businesses should use accrual accounting to match their income and expenses within a given period of time.
Full Disclosure Principle
Businesses that follow this generally accepted accounting principle will report all relevant business information in financial statements or financial statement notes.
Cost Principle
This generally accepted accounting principle states that you should report the historical cost of items on your financial statements.
Materiality Principle
You use this generally accepted accounting principle to determine how important a mistake on an accounting record is.
Conservatism Principle
A generally accepted accounting principle that says accountants must recognize potential liabilities and expenses immediately, but that potential revenue should only be recognized when received.
Generally Accepted Accounting Principles (GAAP)
These are guidelines set up to help with the creation of financial statements for companies that are publicly traded.
1st Step in the Accounting Cycle
During this step of the accounting cycle you must collect and analyze the financial transactions your company made during an accounting period.
6th Step in the Accounting Cycle
Accountants calculate the adjusted trial balance at this stage of the accounting cycle.
7th Step in the Accounting Cycle
You prepare important financial statements, such as a balance sheet or income statement during this part of the accounting cycle.

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