Journal Entries
Are liability accounts increased with a debit or credit?
Credit
Why do we do adjusting entries
To meet expense and revenue recognition principles and to make sure our account balances are correct for the financial statements.
Closing Entries are only performed for what type of accounts
Temporary
what is the normal balance of revenue?
credit balance
What is the accounting equation?
Assets = liability + shareholder's equity
True or False: When journalizing your debits must equal your credits?
True
What is the adjusting entry for consuming prepaid rent?
debit Rent Expense
credit Prepaid Rent
How do we close our dividends account?
Debit Retained Earnings
Credit Dividends
where is equipment found on the classified balance sheet?
PPE
What is the difference between a long-term and short-term asset
short-term assets are expected to be used up within one year or period
The collection of an accounts receivable results in what impact on those accounts
cash increases
accounts receivable decreases
The adjusting entry for accrued salaries and wages looks like?
Debit Salaries and Wages Expense
Credit Salaries and Wages Payable
How do we close our expense accounts
Debit income summary
credit expenses
NO
What are the types of temporary accounts?
Revenues, expenses, and dividends
What is the impact on the accounting equation when we purchase an asset for cash
total assets remains unchanged
We have a 5 year, 3%, $10,000 Note Payable. How much interest did we incur in 6 months?
$150
True or False: A revenue account is closed with a credit to the revenue account and a debit to Income Summary.
False
What is an example of an intangible asset
patents, trademarks, copyrights
True or False: The full disclosure principle ensures that all relevant financial information is reported.
True
When we buy an asset on account what happens to the accounting equation?
Assets increase
Liabilities increase
When we perform services that we had been previously paid for what does the adjusting entry look like?
debit Unearned Service Revenue
credit Service Revenue
During closing entries if we debit Retained Earnings...
did we have a net loss or net income
Net Loss
What order do we complete the financial statements
Income Statement, Retained Earings Statement, Balance Sheet,
What is the Revenue Recognition Principle
revenues are recorded in the period when they are earned