Net Worth & Accounting Eq.
What is the fundamental formula used to calculate an individual's or business's Net Worth?
What is Net Worth = Total Assets - Total Liabilities
What formula calculates Ending Capital on the Statement of Owner's Equity?
What is Ending Capital = Beginning Capital + Owner Investments + Net Income - Owner Drawings
In a standard Chart of Accounts block numbering system (100s-500s), which block is reserved for Expense accounts?
What is 500s
(Reminder that 100s=Assets, 200s=Liabilities, 300s=Equity, 400s=Revenue, 500s=Expenses)
What internal cash control procedure requires two executive signatures for checks exceeding a designated threshold?
What is Dual Control Signatures
An owner paying a personal home electricity bill using company checking violates which core GAAP assumption?
Business Entity Assumption
Items of monetary value owned by a business—such as Cash, Checking, CD, and Home value—are classified as what?
What is Assets
When an owner withdraws cash or assets from the business for personal use, which equity account is debited?
What is Owner Drawings (or Owner's Draw)
According to normal balance rules, which three account types carry normal DEBIT balances? (Hint: Acronym ADE)
What is Assets, Drawings, Expenses (ADE)
Checks written and recorded in the company check register that have not yet cleared the bank statement are called what?
Outstanding Checks
Which GAAP principle dictates that expenses must be recorded in the same period as the revenues they helped generate?
What is Matching Principle
Financial obligations or debts owed to external creditors—such as Mortgages, Auto Loans, and Credit Cards—are classified as what?
What is Liabilities
What financial condition occurs on the Income Statement when total operating expenses exceed total revenues?
What is Net Loss
What is the primary objective of preparing an Unadjusted Trial Balance before making adjusting entries?
What is To prove mathematical equality between Total Debits and Total Credits
On a 2-column bank reconciliation, how are Deposits in Transit treated?
What is Added to the Bank Statement Balance
Which 2002 federal law mandates CEO/CFO personal criminal accountability for financial statements and protects whistleblowers?
What is Sarbanes-Oxley Act (SOX)
Nikita has $278,700 in Total Assets and $227,000 in Total Liabilities. What is her calculated Net Worth?
What is $51,700
Beginning Capital is $10,000, Investments are $5,000, Net Income is $8,000, and Drawings are $3,000. What is Ending Capital?
What is $20,000
To prove mathematical equality between Total Debits and Total Credits
What is Wrong Column Placement (e.g., placing a debit entry in the credit column doubles the discrepancy)
When establishing a $200 Petty Cash fund, which journal entry is recorded?
What is Debit Petty Cash $200; Credit Cash $200
What three core principles form the pillar of the AICPA Code of Professional Conduct?
Integrity, Objectivity, and Due Care
Which of the 5 C's of Credit directly evaluates an applicant's Net Worth or financial safety net before granting a loan?
What is Capital
If an owner withdraws $10,000 in drawings while the business only generates $4,000 in net income, what happens to overall equity?
What is Overall Equity shrinks by $6,000 (Capital Drain)
If a trial balance discrepancy of $810 is evenly divisible by 9 ($810 / 9 = 90), what specific data entry error occurred?
What is Transposition Error (swapping adjacent digits, e.g., entering $13,900 as $13,090)
A $200 petty cash fund has $20 physical cash remaining and $179 in receipts ($199 total). What entry accounts for the $1.00 discrepancy?
What is Debit Cash Short & Over for $1.00 (Shortage treated as an expense)
Which professional credential focuses specifically on evaluating corporate internal controls, operational efficiency, and risk?
CIA (Certified Internal Auditor)