Accounting Basics

1 Accounting Basics (Flashcards: Double-sided). Harold Averkamp CPA, MBA. Our materials are copyright AccountingCoach, LLC and are for personal use by the original purchaser only. We do not allow our materials to be reproduced or distributed elsewhere. Instructions The following flashcards are intended for double-sided or duplex printing. Each term and definition is numbered in the lower, right-hand corner of the card. When printed correctly, Definition A1 will appear on the back of Term A1.. If your printer has a special duplex option, you can use it to automatically print this double-sided PDF.

2 For manual double-sided printing Step 1. Print the odd-numbered pages starting with page 3. For example: 3, 5, 7, etc. Step 2. Take the printed pages from Step 1 and place them back into the paper tray (printed side up/blank side down for most printers). Step 3. Print the even-numbered pages starting with page 4. For example: 4, 6, 8, etc. Step 4. After printing each batch of cards, make sure that all card numbers correspond. When printed correctly, Definition A1 will appear on the back of Term A1.. Note: Your printer may require you to print the even-numbered pages in reverse order.

3 Be sure to check your printer's instructions if you have any difficulties. Definitions will appear up-side-down when compared to their matching terms. This is intended to make flipping the cards easier. For personal use by the original purchaser only. Copyright AccountingCoach .com. 2. cash method of Accounting accrual method of Accounting (or) (or). cash basis of Accounting accrual basis of Accounting A1 A2. depreciation land A3 A4. income statement balance sheet (or). (or) statement of earnings statement of financial position (or). statement of operations A5 A6.

4 Cost principle (or) revenues historical cost principle A7 A8. For personal use by the original purchaser only. Copyright AccountingCoach .com. 3a 3b For personal use by the original purchaser only. Copyright AccountingCoach .com. This basic underlying principle requires Under the accrual method, these are a transaction to be recorded at its cash reported on the income statement value at the time of the transaction. It when they are earned. Sales and fees also prevents reporting the increases earned are examples. in the market value of property.

5 A7 A8. This financial statement reports This financial statement reports a a corporation's profitability for a company's financial position as of specified period of time. It reports a moment of time. It reports the revenues, expenses, gains, losses, and assets, liabilities and stockholders' (or the resulting net income. Also referred owner's) equity. to as the P&L. A5 A6. This is the allocation of a plant asset's cost to expense over the asset's useful This asset is part of property, plant and life. The purpose is to match the equipment but it is not depreciated.

6 Asset's cost to the years that benefit from its use. A3 A4. This method reports revenues when This method reports revenues when cash is received (as opposed to when they are earned (as opposed to when the revenues are earned) and reports the cash is received) and reports expenses when they are paid (as expenses when they occur (as opposed opposed to when they occur). to when they are paid). A1 A2. expenses assets A9 A10. stockholders' equity liabilities (or). shareholders' equity A11 A12. Accounting equation (or) debit bookkeeping equation A13 A14.

7 Double-entry Accounting credit (or). double-entry bookkeeping A15 A16. For personal use by the original purchaser only. Copyright AccountingCoach .com. 4a 4b For personal use by the original purchaser only. Copyright AccountingCoach .com. Under this system every transaction This term indicates the right side will result in an amount recorded in of a general ledger account. It is at least two general ledger accounts. also the normal balance for liability, It also requires that the amounts stockholders' equity, revenue, and gain recorded as debits must be equal to accounts.

8 The amounts recorded as credits. A15 A16. This algebraic expression is assets = This term indicates the left side of a liabilities + owner's (or stockholders') general ledger account. It is also the equity. It should remain in balance normal balance under the double-entry system. for asset, expense, and loss accounts. A13 A14. The total amount for this section of a corporation's balance sheet is the These are the obligations of a amount of assets minus liabilities. company and are one of the main It reports the corporation's paid-in elements of the balance sheet and capital, retained earnings, and any Accounting equation.

9 Deferred deduction for treasury stock. It is also revenues are one of these. the total amount of the corporation's book value. A11 A12. These are a company's resources that Under the accrual method, these costs have future economic value which are reported on the income statement can be measured in the company's when they have been used up in the currency. Prepaid expenses are one of process of earning revenues. these. A9 A10. cash flow statement chart of accounts (or). statement of cash flows A17 A18. earnings per share book value (or) (or).

10 EPS carrying value A19 A20. gross profit current assets (or). gross margin A21 A22. SG&A. notes to the financial (or). statements selling, general and administrative A23 A24. For personal use by the original purchaser only. Copyright AccountingCoach .com. 5a 5b For personal use by the original purchaser only. Copyright AccountingCoach .com. These are an integral part of the These are a company's operating financial statements and are required expenses other than the cost of goods by the full disclosure principle. They sold. They are also period costs (as include the company's significant opposed to product costs).