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Cards In This Set
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Transactions a firm conducts with a separate economic entity, such as selling products to a customer, purchasing supplies from a vendor, paying salaries, and borrowing from a bank are defined as what?
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External transactions
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Events that affect the financial position of the company but do not include an exchange with a separate economic entity are defined as what kind of transaction?
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Internal transactions
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What process is the foundation of financial accounting?
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The six-step measurement process (external transactions)
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What is the first step of measuring external transactions?
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Using source documents to identify accounts affected by an external
transactions
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What do documents found in the first step of the measuring process usually identify?
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The date and nature of transactions, the participating parties, and the monetary terms
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What will be affected by every transaction or economic event?
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At least two accounts
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What are the three components of retained earnings?
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Revenues, expenses, and dividends
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True or False? An increase in revenues decreases stockholders' equity.
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False
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True or False? An increase in expenses or dividends decreases stockholders' equity?
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True
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What two categories of the accounting equation does receiving cash in advance for services to be provided later effect?
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Assets and Liabilities
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What are increases to accounts on the left (asset) side of the accounting equation referred to?
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Debits
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What are increases to accounts on the right (liabilities and SHE) side of the accounting equation referred to?
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Credits
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Are expenses and dividends increased with a debit or credit?
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A debit
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