YouTube Notes: yYX4bvQSqbo

    Master this deck with 14 terms through effective study methods.

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    Created by @kiaraaa_

    What is financial accounting?

    Involves identifying, recording, summarizing, and analyzing financial transactions.

    What does double entry accounting ensure?

    Total debits equal total credits, maintaining balance in financial records.

    What are assets?

    Valuable resources owned by a business that provide future benefits.

    How do liabilities differ from equity?

    Liabilities are obligations to third parties, while equity represents the owner's claim.

    What is the accounting equation?

    Assets equal liabilities plus equity, reflecting a business's financial position.

    What is a trial balance?

    An internal report summarizing closing balances of all general ledger accounts.

    What are adjusting entries?

    Journal entries that align financial records with the accrual method of accounting.

    What is the accrual method of accounting?

    Recognizes revenue when earned and expenses when incurred, not when cash is exchanged.

    What happens if cash accounting is used instead of accrual?

    Revenue is recognized upon cash receipt, potentially misrepresenting financial performance.

    What are financial statements?

    Reports summarizing a business's activities and financial health over a period.

    What does a balance sheet show?

    A snapshot of a business's assets, liabilities, and equity at a specific point in time.

    What is the purpose of a cash flow statement?

    Summarizes cash inflows and outflows over a specific period.

    What are closing entries?

    Journal entries that reset temporary accounts like revenues and expenses to zero.

    What is the accounting cycle?

    The process of identifying, recording, summarizing, and reporting financial transactions.