Accounting Chapters 3 & 4 Flashcards

Accounts Payable: Liability account with a credit balance found on the Balance Sheet.
Accounts Receivable: Asset account with a debit balance included in the Balance Sheet.
Capital Stock: Represents owners' equity with a credit balance on the Balance Sheet.
Retained Earnings: Component of owners' equity showing a credit balance on the Balance Sheet.

Balance Sheet: Displays assets (like Cash, Buildings, Equipment, Accounts Receivable) with debit balances and liabilities (like Accounts Payable, Interest Payable, Rent Payable) with credit balances.
Income Statement: Shows revenues (such as Fees Earned, Interest Income, Sales) with credit balances and expenses (like Advertising Expense, Salaries/Wages Expense) with debit balances.
Statement of Retained Earnings: Reflects dividends as a debit balance.

Cash: Highly liquid asset with a debit balance; also found in Balance Sheet.
Inventory: Merchandise asset with a debit balance listed on the Balance Sheet.
Prepaid Rent: Asset indicating advance payment with a debit balance on the Balance Sheet.
Unexpired Insurance: Asset representing future insurance benefits and has a debit balance on the Balance Sheet.
Depreciation: While assets depreciate, the Accumulated Depreciation account is a contra-asset with a credit balance.

Advertising Expense: Recorded as a debit on the Income Statement.
Rent Expense: Another expense that appears with a debit balance on the Income Statement.
Salaries/Wages Expense: Directly reduces net income with a debit balance noted on the Income Statement.
Cost of Goods Sold: Significant expense for sales operations, presenting with a debit balance on the Income Statement.

Fees Earned: Revenue earned that carries a credit balance in the Income Statement.
Interest Income: Revenue generated from interest with a credit balance on the Income Statement.
Rent Revenue: Income from property rental also recorded with a credit balance on the Income Statement.
Unearned Fees: Liability reflecting income received before services are performed, with a credit balance on the Balance Sheet.

Accumulated Depreciation: A contra-asset account that shows accumulated depreciation for fixed assets, noted for its credit balance on the Balance Sheet.