Debits and Credits
Credits always have to equal what
Debits
Receive cash from owner as an investment
debit cash, credit capital
The three elements of the accounting equation.
What are assets, liabilities, and owner's equity.
Every transaction must have this. (The most important part)
What is a debit and a credit.
How many steps are in the accounting cycle?
10
The acronym to remember your T-Accounts is
DC ADE LER
Purchase supplies with cash
debit supplies, credit cash
The accounting equation.
What is assets=liabilities+owner's equity
The amount of the debits and credits of every transaction must be this.
What is equal.
Recording transactions in a journal is called what?
Journalizing
What does the ADE stand for on the debit side of the T-Account acronym?
Assets, Drawing, Expenses
Insurance paid for in advance would be debited to this account.
Prepaid insurance
The balance of assets when owner's equity is $40000 and liabilities are $40000.
What is $80000.
Debts owed to outsiders (People in the world).
What are liabilities.
What step number is "Journalizing" in the accounting cycle?
two
What does the LER stand for on the credit side of the T-Account acronym?
Liabilities, Owner's Equity, Revenue
Received cash for services
debit cash, credit sales
Assets minus liabilities.
What is owner's equity.
The financial statement that looks at revenues and expenses.
What is the income statement.
Entries made at the end of the accounting period to bring the accounts up to date.
What are adjusting entries
A Revenue account has this for a normal balance
Credit
Sold services on account
debit accounts receivable, credit sales
This is the financial statement based on the accounting equation.
What is the balance sheet.
The three basic financial statements.
What are income statement, balance sheet, and statement of owner's equity.
The entries used to close the books at the end of the year.
What are closing entries.