Accounting Basics (Flashcards)

This amount is an asset’s cost minus its accumulated depreciation. It is also the face value of bonds minus its unamortized discount (or plus its unamortized premium). It is also the amount of a corporation’s stockholders’ equity.

This amount is required to appear on the income statement of a publicly traded corporation. It uses the weighted average number of shares of common stock outstanding.

This listing of the general ledger accounts does not include the account balances or other amounts.

This financial statement reports the major changes in a corporation’s cash and cash equivalents. Amounts are grouped according to operating, investing, and financing activities.

Under this system every transaction will result in an amount recorded in at least two general ledger accounts. It also requires that the amounts recorded as debits must be equal to the amounts recorded as credits.

This term indicates the right side of a general ledger account. It is also the normal balance for liability, stockholders’ equity, revenue, and gain accounts.

This term indicates the left side of a general ledger account. It is also the normal balance for asset, expense, and loss accounts.

This algebraic expression is assets = liabilities + owner’s (or stockholders’) equity. It should remain in balance under the double-entry system.

The total amount for this section of a corporation’s balance sheet is the amount of assets minus liabilities. It reports the corporation’s paid-in capital, retained earnings, and any deduction for treasury stock. It is also the total amount of the corporation’s book value.

These are the obligations of a company and are one of the main elements of the balance sheet and accounting equation. Deferred revenues are one of these.

These are a company’s resources that have future economic value which can be measured in the company’s currency. Prepaid expenses are one of these.

Under the accrual method, these costs are reported on the income statement when they have been used up in the process of earning revenues.

Under the accrual method, these are reported on the income statement when they are earned. Sales and fees earned are examples.

This basic underlying principle requires a transaction to be recorded at its cash value at the time of the transaction. It also prevents reporting the increases in the market value of property.

This financial statement reports a corporation’s profitability for a specified period of time. It reports revenues, expenses, gains, losses, and the resulting net income. Also referred to as the P&L.

This asset is part of property, plant and equipment but it is not depreciated.

This financial statement reports a company’s financial position as of a moment of time. It reports the assets, liabilities and stockholders’ (or owner’s) equity.

This is the allocation of a plant asset’s cost to expense over the asset’s useful life. The purpose is to match the asset’s cost to the years that benefit from its use.

This method reports revenues when they are earned (as opposed to when the cash is received) and reports expenses when they occur (as opposed to when they are paid).

This method reports revenues when cash is received (as opposed to when the revenues are earned) and reports expenses when they are paid (as opposed to when they occur).

These are a company’s operating expenses other than the cost of goods sold. They are also period costs (as opposed to product costs).

This basic underlying accounting principle requires that some expenses and liabilities be accrued or deferred.

This current asset is the cost of a merchant’s or manufacturer’s goods held for sale.

These are an integral part of the financial statements and are required by the full disclosure principle. They include the company’s significant accounting policies.