accounting 1
Basics
Basics
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Lernkarten
what is on the right side of the balance sheet?
Liabilities and equity
what is on the left side of the balancesheet?
Assets
what does accounts receivable mean?
performing a service for clients who do not pay immediately
what does accounts payable mean?
we received a service we have not yet payed for
what does expense mean?
when we spend money, e.g.: rent expense or salaries expense
what does common stock mean?
when the owner contributes money to the corporation in exchange for stock
How do you calculate an income statement?
Revehues - Expenses = Net income/Net loss
how do you calculate a statement of retained earnings?
Retained earnings, Beginning
+ Net income or Net loss for the period
- Dividends for the period
= Retained Earnings, Ending
how do you caluclate a balance sheet?
Assets = Liabilities + Stockholder's Equity
How is the Statement of cash flows prepared?
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activites
how do you calculate an income statement?
Revenues - Expenses = Net income
how do you calculate ROA (return on assets) and what does it measure?
Net income / average total assets
It measures how profitablya companyuses it's assets
what are the guidelines for accounting information called?
Generally Accepted Accounting Prinicples
Which principle states that the acquired assets must be recorded at the amount actually paid rather than at the estimated market value?
cost principle
What does the income statement summarize?
Revenues and expenses for a specific period
how do you calculate the return on assets?
dividing net income by average total assets
what is the difference between balance sheet accounts and income statment accounts?
Balance sheet--> cash, A/P, common stock,
Income statement--> Service Revenue, rent expense
give an example for source documents
Invoice, bank checks, receipts, contracts
what is posting?
transferring data from the journal to the ledger
how can you calculate the Debt Ratio?
Total Liabilities/Total assets
