Basic Accounting
When do you use the double lines?
On the final answer
What do you do after posting transactions to the general journal?
Post those transactions to general ledgers
T or F:
The Balance Sheet contains things like Revenue, Expenses, and Profitability
F: It's the income statement
True or False
Paying the telephone bill is an example of an expense.
True
The accounting equation is Assets=Income statement + Liabilities. T or F?
False: Assets=Owners Equity + Liabilities
What does GAAP stand for
Generally Accepted Accounting Principles
How do you format a General Journal?
Debits, Credits, Explanation
T/F: You will find Owner's Equity on a Income Statement.
F: You will find it on the Owner's equity and the Balance sheet
Which account increases when you purchase something but have not yet paid for it?
Accounts Payable
What type of balance does an Asset account have?
Debit
What's the difference between accounts payable and accounts receivable?
Accounts payable is the money that you owe to vendors. Accounts receivable is the money owed to your business or an asset.
Withdrawals have a normal balance in which column?
Debit
Income statement uses what two types of accounts?
Revenue and Expenses
Which accounts are affected when a company pays the salaries of its’ employees?
Cash and salaries expense
If the withdrawals account amount is higher than the net income account amount, found in the Statement of Owner's Equity, will the capital increase or decrease?
Decrease
Is Capital considered a debit or a credit?
A credit.
What is used to record a business event as they occur during the year?
Journal entry
What is the use of a balance sheet?
It provides you with information like an asset, liability, and equity. It is also used to track your future cash flow!
How do you close out a revenue account?
By debiting it in the Fees Earned and crediting it into the Income Summary.
What does DEAD stand for?
Debits, Expenses, Assets, and Draws (owner withdraw)
What are debits and credits and how do they differ?
Debits increase asset and expense accounts and decrease liability, equity, and revenue accounts.
Credits increase liability, equity, and
revenue accounts and decrease asset and expense accounts.
There is six things you would have to write in the General Journal that are? Name 3 of them...
Answer: Account Titles, Description, date, PR, credit and debit.
Which financial statement reports the revenues and expenses for
a period of time such as a year or a month?
Income Statement
True or False:
Account categories that are increased by debits and decreased by credits has a normal balance on the debit column and the opposite is true for accounts whose normal balance is on the credit column.
True
What are the 4 main types of businesses?
a. Sole proprietorship
b. Partnerships
c. Corporation
d. Limited Liability Companies