Concepts
What is the PCAOB?
The Public Company Accounting Oversight Board
Write the journal entry for the following transaction: Isabelle Inc. paid $2,000 cash for one month’s rent.
DEBIT: RENT EXPENSE 2,000
CREDIT:CASH 2,000
True or False: Adjusting entries include cash
FALSE
What is at least one example of a temporary account?
1. Revenue
2. Expense
3. Dividends
What does the income statement calculate?
Net Income = Revenues - Expenses
Is financial accounting for internal or external users?
External
Write the journal entry for the following transaction: On January 25, 2025 Isabelle Inc. paid $400 cash for the utilities in the current month.
DEBIT:UTILITIES EXPENSE 400
CREDIT: CASH 400
What is deferred revenue?
When cash is received from customers in advance of services being provided (we have not EARNED any revenue)
Where do the temporary accounts “close” to?
Retained Earnings
What is accumulated depreciation?
What are the three business activities?
1. Operating Activities
2. Financing Activities
3. Investing Activities
Write the journal entry for the following transaction: On April 20, 2025 Isabelle Inc. received $1, 800 cash from a client for services to be performed over the next month.
DEBIT:CASH 1,800
CREDIT:DEFERRED REVENUE 1,800
Adjusting entries are needed for which accounting basis method?
Accrual basis accounting
How do you close out the revenue accounts? What is the debit & the credit?
DEBIT:REVENUE ACCOUNTS
CREDIT:RETAINED EARNINGS
Calculate Common Stock with the following information:
Assets= 10,000
Liabilities= 6,000
Retained Earnings= 2,000
Common Stock = 2,000
What does GAAP stand for and who maintains it?
Generally Accepted Accounting Principles & the FASB (Financial Accounting Standards Board)
Write the journal entry for the following transaction: On September 15, Isabelle Inc. completed $500 worth of services.They have not received a cash payment yet.
DEBIT:ACCOUNTS RECEIVABLE 500
CREDIT:SERVICE REVENUE 500
Write the journal entry for the following transaction: On September 1, 2025, Isabelle Inc. bought a one year insurance policy for $12,000. Record the adjusting entry needed on December 31, 2025.
DEBIT:INSURANCE EXPENSE 4,000
CREDIT: PREPAID INSURANCE 4,000
How do you close out the expense accounts? What is the debit & the credit?
DEBIT:RETAINED EARNINGS
CREDIT:EXPENSE ACCOUNTS
What is the main difference between assets and liabilitie?
Assets = Resources the business OWNS
Liabilities = Things the business OWES
How do you calculate ending retained earnings?
Beginning Retained Earnings +Net Income (Loss) - Dividends
Write the journal entry for the following transaction:On March 14, Isabelle Inc. purchased $2,500 worth of equipment.They paid $500 cash and agreed to pay the remaining balance in a month.
DEBIT:EQUIPMENT 2,500
CREDIT:CASH 500
CREDIT:ACCOUNTS PAYABLE 2,000
Write the journal entry for the following transaction: on November 1, 2025, Isabelle Inc. borrowed $10,000 by signing a 12 month note at 6% interest. The principle and interest are due next year. Prepare the adjusting entry needed on December 31,2025.
DEBIT:INTEREST EXPENSE 1,200
CREDIT:INTEREST PAYABLE 1,200
How do you close out the dividend account? What is the debit & the credit?
DEBIT:RETAINED EARNINGS
CREDIT:DIVIDENDS
What is a corporation?
A separate entity from the owners with limited liability