Accounting Equation(Flashcards)

These are a company’s obligations and include deferred revenues.

This is the difference between the amount of a proprietorship’s assets and liabilities. It consists of the owner’s capital account and drawing account.

This is the difference between the amount of a corporation’s assets and liabilities. It consists of paid-in capital plus retained earnings minus treasury stock.

These are the amounts that have been earned by a company and are reported on a company’s income statement.

These costs are reported on the income statement because they are caused by the revenues, or they were used up during the current accounting period.

This algebraic expression differs from the basic expression because “stockholders’ equity” is replaced with “Paid-in capital + Revenues – Expenses – Dividends – Treasury stock.”

This type of claim by stockholders is secondary to the claims of a corporation’s creditors.

This financial statement’s format is similar to the accounting equation. It reports amounts as of the last instant or moment of the accounting period.

These individual records are contained in the general ledger and are used to sort and store transaction amounts.

This system requires that every business transaction must affect at least two general ledger accounts, and the debit amounts must be equal to credit amounts.

This is a distribution of business cash (or other asset) to the sole proprietor for the owner’s personal use. It is not a business expense.

This is usually a distribution of cash to stockholders (shareholders) that is not an expense but will cause a decrease in retained earnings.

These are liabilities until they are earned by the company receiving them or until they are returned to the customer.

This current asset represents the unexpired portion of the premiums paid to an insurance company.

This simple form of a business structure has one owner. The accountant assumes that its transactions are separate from the owner’s personal transactions.

The owners of this legal entity are known as stockholders.

This method of accounting reports revenues when they are earned and reports expenses when they occur.

This method of accounting reports revenues when cash is received and reports expenses when they are paid.