Accounting Basics Flashcard

Front

What are the three basic activities in the accounting process?

Back

Identifies, Records, Communicates

Front

Who are considered external users of financial information?

Back

Investors and Creditors

Front

What does the Historical Cost Principle dictate?

Back

Assets should be recorded at their original cost

Front

What is the accounting equation?

Back

Assets = Liabilities + Owner's Equity

Front

T-account

Back

A basic account format consisting of a title, debit, and credit side

Front

In double-entry accounting, what does 'debit' and 'credit' refer to?

Back

Debit and credit refer to the left and right sides of an account

Front

What is the purpose of the ledger in accounting?

Back

To maintain a group of accounts for a company

Front

What is the difference between accrual and cash-basis accounting?

Back

Accrual recognizes revenues when earned; cash-basis recognizes revenues when cash is received

Front

Which of the following is an example of a deferral?
- Interest Payable
- Prepaid Expenses
- Accrued Revenues

Back

Prepaid Expenses

Front

What is the adjusting entry for depreciation expense?

Back

Debit: Depreciation Expense; Credit: Accumulated Depreciation