Chapter 1
Accounting is called the language of...
Business
The fundamental accounting equation
Assets = Liabilities + Equity
Right side of a T account is referred to as
In what order are transactions journalized
Chronological
The property that a business owns is referred to as its
Assets
GAAP stands for
Generally Accepted Accounting Principles
If assets are $7,000, and equity is $4,000, liabilities are...
$3,000
Expense accounts are increased on this side of the T-account
Debit
True or False
A ledger is sometimes referred to as a record of original entry
False
Liabilities = $4,050
Equity = $32,150
How much are assets?
Assets = $36,200
CPA stands for
Certified Public Accountant
The formula for net income
A business earned $4,000 on account from clients. The journal entry is...
DR A/R $4K
CR Fees Income/Revenue $4K
Lion King Corporation reported net income for the year to be $17,200 for 12/31/2025. Then, they discovered an entry for revenue earned on 12/31/2025 in the amount of $1,800 had not been journalized and posted. What is the net income after the correcting journal entry is posted?
$19,000
Give an example of a permanent account
Business entity that is considered a separate legal entity (entity type)
Corporation
Financial statements are prepared in what order
Income statement, statement of owner's equity, balance sheet
The normal balance of an owner's drawing account (debit or credit)
Debit
Patrick Star incorporated purchased some shop equipment for $5,300 in cash. By mistake, the journal entry debited Office Equipment account rather than the Shop Equipment account. What correcting entry would be necessary?
Debit Shop Equipment $5,300
Credit Office Equipment $5,300
OVO Records Inc paid $1,200 to its landlord for rent for the next 3 months. The journal entry to record this transaction is
Credit Cash $1,200
The SEC (Security and Exchange Commissions) regulates accounting methods and financial reporting for this type of corporation
Publicly owned (public)
Cash - $9,800
Supplies - ???
Accounts Payable - $4,000
Spongebob Capital - $10,170
What is the missing Supplies balance?
$4,370
The total of figures on the debit side of the Accounts Receivable T-account is $35,800. The total figures on the credit side is $16,100. The balance of this account is...
$19,700
Bad Bunny earned $2,500 of revenue collecting $1,000 immediately and will collect the remaining amount in 30 days.
The journal entry to record this transaction is -
Debit Cash $1,000
Debit A/R $1,500
Credit Fees Income $2,500
What happens after the trial balance is prepared?
Preparation of the financial statements