Accounting in Action
Assets = Owner’s Equity + Liabilities
What is the accounting equation
Credit amounts exceed the debits
What is a credit balance
Periods of less than one year
What are interim periods
Closed at the end of the period
What are the temporary accounts
Buyer accepts ownership when goods are delivered
What is FOB destination
Presents revenues, expenses and profit or loss for a specific period of time
What is income statement
Entering transaction data in the journal
What is journalizing
Revenue is recorded when earned
What is revenue recognition
The ability to pay obligations as they come due within the next year
What is the liquidity
The difference between Sales Revenue and Cost of Goods Sold
What is the gross profit
These are global accounting standards used in many countries
What is IFRS
Procedure of transferring journal entries to the ledger accounts
What is posting
Cash received and recorded as a liability before revenue earned
What is unearned revenue
A working tool, not a permanent accounting record
What are the Worksheets
Cost of Goods Sold is calculated only at the end of the accounting period
What is the periodic inventory system
The business type is owned by two or more people who share profits
What is a partnership
Analyze business transaction
What is the first step of the accounting cycle
Expenses incurred but not yet paid or recorded
What is Accrued Expenses
The length of it takes from starting with cash to ending with cash in producing revenue
What is operating cycle
Gross profit expressed as a percentage
What is Gross profit margin
The business type is a separate legal entity from its owners
What is a corporation
Error divisible by 9
What is a transposition error
An account with the opposite balance compared to its related asset account
What is a contra account
DAILY DOUBLE
An avoidable step, unnecessary if the records are free of errors
What is correcting entries
Statement with multiple sections
What is a Multiple-Step Income Statement