Basic Accounting Flashcards

Vocabulary flashcards for Basic Accounting review.

Accounts Receivable

Asset created when a business makes a sale on account.

Pay the creditors

In the liquidation of the partnership, the first cash realized is used to

The old partners in their old profit and loss ratio

When the investment of a new partner exceeds the new partner’s initial capital balance and asset revaluation is not recorded, who will receive the bonus?

No bonus nor asset revaluation

If the amount invested by the incoming partner is equal to the interest he acquires, then there is

Retained earnings

The balance of the income summary account of a corporation is transferred to which of the following accounts?

Required

If the partner withdraws from the partnership before the end of the accounting period, updating of the partnership books is

Contra-stockholder’s equity account

Treasury stock is classified as a(n)

Investors

These users require information on risk and return investment

Reversing the accounts

A post closing trial balance is prepared before

Accountancy Law (Philippines)

The law regulating the practice of accountancy in the Philippines (R.A. No. 9298).

Overall Objective of Accounting

To provide quantitative financial information about an entity that is useful in making economic decisions.

Accrual Accounting

A method where revenue is recorded when services are rendered, regardless of when cash is received.

General Ledger

A ledger containing all of the accounts of a business.

Post-Closing Trial Balance

A trial balance prepared after adjusting and closing the books.

Liquidation of Partnership

The sale of assets, payment of liabilities, and distribution of remaining cash to partners in a partnership.

Capitalist Partner

A partner who contributes capital to the partnership.

Bonus

Distribution of profit that is granted only if there is profit.

Authorized Stock

The total number of shares a corporation is permitted to issue as stated in its corporate charter.

Discount

The difference when shares of stock are sold for less than their par value.

Stock Split

A reduction of the par or stated value of stock by issuing additional shares.

Treasury Stock

Shares bought by a company of their own stock. Equity account that represents a company's own stock that has been reacquired.

General Partners

Partners who have unlimited liability in a limited partnership.