t/f accounting is the language of business

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chapter 1

accounting

40

Accounting

12th Grade

09/09/2009
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Term

accounting
Definition

planning, recording, analyzing, and interpreting financial information
Term

accounting system
Definition

a planned process for providing financial information that will be useful to management
Term

accounting records
Definition

organized summaries of a business’s financial activities
Term

financial statements
Definition

financial reports that summarize the financial condition and operations of a business
Term

service business
Definition

a business that performs an activity for a fee
Term

proprietorship
Definition

a business owned by a person
Term

asset
Definition

anything of value that is owned
Term

equities
Definition

financial rights to the assets of a business
Term

liability
Definition

an amount owed by a business
Term

owner’s equity
Definition

the amount remaining after the value of all it’s liabilities is subtracted from the balue of all assets
Term

accounting equation
Definition

an equation showing the relationship among assets, liabilities, and owner’s equity.
Term

ethics
Definition

the principles of right and wrong that guide an individual in making decisions
Term

business ethics
Definition

the use of ethics in making business decisions
Term

transaction
Definition

a business activity that changes assets, liabilities, or owner’s equity.
Term

account
Definition

a record summarizing all the information pertaining to a single item in the accounting equation.
Term

account title
Definition

the name given to an account.
Term

account balance
Definition

the amount in an account
Term

capital
Definition

the account used to summarize the owner’s equity in a business
Term

revenue
Definition

an increase in owner’s equity resulting from the operation of a business.
Term

sale on account
Definition

a sale for which cash will be reciebed at a later date
Term

expense
Definition

a decrease in owner’s equity resulting from the operation of a business
Term

withdrawals
Definition

assets taken out of a business for the owner’s personal use.
Term

accounting is the language of business. true or false?
Definition

true
Term

keeping personal and business records separate is an application of the business entity concept. true or false?
Definition

true
Term

assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business. true or false?
Definition

true
Term

the relationship among assets, liabilities, and owner’s equity can be written as an equation. true or false?
Definition

true
Term

the accounting equation does not have to be in balance to be correct. true or false?
Definition

false
Term

the sum of the assets and liabilities of a business always equals the investment of the business owner. true or false?
Definition

false
Term

recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept.true or false?
Definition

false
Term

the capital account is an owner’s equity account. true or false?
Definition

true
Term

if two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance. true or false?
Definition

false
Term

when a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage. true or false?
Definition

false
Term

when items are bought and paid for later this is referred to as buying on account. true or false?
Definition

true
Term

when cash is paid on account, a liability is increased. true or false?
Definition

false
Term

when cash is received from a sale, the total amount of both assets and owner’s equity is increased. true or false?
Definition

true
Term

a sale for which cash will be received at a later date is called a charge sale. true or false?
Definition

true
Term

the accounting concept realization of revenue is applied when revenue is recorded at the time goods or services are sold. true or false?
Definition

true
Term

when cash is paid for expenses, the business has more equity. true or false?
Definition

false
Term

when a company receives cash from a customer for a prior sale, the transaction increases the cash account balance and increases the accounts receivable balance. true or false?
Definition

false
Term

a withdrawal decreases owner’s equity. true or false?
Definition

true

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41 terms

sommer_kk

Accounting: Chapter 1

STUDY

PLAY

Service business
A business that performs an activity for a fee
Proprietorship
A business owned by one person
Asset
Anything of value that is owned
Equities
Financial rights to the assets of a business
Liability
An amount owed by a business
Owner’s equity
The amount remaining after the value of all liabilities is subtracted form the value of all assets
Accounting equation
An equation showing the relationship among assets
Transaction
A business activity that changes assets, liabilities, or owner’s equity
REvenue
An increase in owner’s equity resulting from the operation for a business
Expense
A decrease in owner’s equity resulting form the operation of a business
Withdrawals
Assets taken out of a business for the owner’s personal use
True
T/F: Accounting is the language of business
True
T/F: Keeping personal and business records separate is an application of the business entity concept
True
T/F: Assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business
True
T/F: The relationship among assets, liabilities, and owner’s equity can be written as an equation
False
T/F: The accounting equation does not have to be in balance to be correct
False
T/F: The sum of the assets and liabilities of a business always equals the investment of the business owner
False
T/F: Recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept
True
T/F: The capital account is an owner’s equity account
True
T/F: If two amounts are recorded on the same side of the accounting equation, the equation will be in balance
False
T/F: When a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage
True
T/F: When items are bought and paid for later this referred to as buying on account
False
T/F: When cash is paid on account, a liability is increased
True
T/F: When cash is received from a sale the total amount of both assets and owner’s equity is increased
True
T/F: A sale for which cash will be received at a later date is called a charge sale
True
T/F: The accounting concept Realization of Revenue is applied when revenue is recorded at the time goods or serves are sold
False
T/F: When cash is paid for expenses, the business has more equity
False
T/F: When a company receives cash from a customer for a prior sale, the transaction increases the cash account balance and increases the accounts receivable balance
True
T/F: A withdrawal decreases owner’s equity
True
T/F: An amount owed by a business is a liability
False
T/F: Assets are listen on the right side of the accounting equation
False
T/F: Financial rights tot he assets of a business are called owner’s equity
True
T/F: A business that performs an activity for a fee is called a service business
True
T/F: When supplies are bought on account, both supplies and accounts payable are increased in the accounting equation
False
T/F: When cash is paid for insurance, an asset and a liability are changed in the accounting equation
False
T/F: A business activity that changes assets, liabilities, or owner’s equity is called a balance
True
T/F: The left side of the accounting equation must always equal the right side
False
T/F: Owners equity is listed on the left side of the balance sheet
True
T/F: An expense is a decrease in owner’s equity resulting form business operations
False
T/F: The accounting concept Realization of Revenue is applied when a balance sheet is prepared with the expectation that the business will continue to operate indefinitely
True
T/F: A withdrawal decreases owner’s equity