Basics
What is the accounting equation?
Assets = Liabilities + Owner´s Equity
What is a Liability? List 2 examples.
Future obligation.
Current liabilities - Accounts Payable
Long term libailities - Bank Loan Payable
The owner of Company X invests $100 in the Company X
DR. Cash 100
CR. Capital 100
The Company paid their staff $450
DR. Wage Expense 450
CR. Cash 450
What is an Asset? List 3 examples.
Resource owned by the Company that will provide future benefit.
Current Assets - Cash, Accounts Receivable, Inventory
Fixed Assets - Building, Land, Equipment, Machinery
What is Owner´s Equity? List the 4 components.
Owner´s claim to company assets after liabilities have been paid.
Income, Expenses, Capital & Drawings
The Company borrowed $1,000 from the bank
DR. Cash 1,000
CR. Bank Loan Payable 1,000
The Company recieved a telephone bill of $80 but didn´t pay yet
DR. Telephone expense 80
CR. Accounts Payable 80
Name the 4 Financial Statements.
What is a Trial Balance?
Statement of debit and credit balances to ensure your journal entries are correct
The Company purchased equipment of $2,500 and agreed to pay for it later
DR. Equipment 2,500
CR. Accounts Payable
Depreciation on equipment for the month is $40
DR. Depreciation expense 40
CR. Accumulated depreciation 40
What are the three types of businesses?
Merchandise, Manufacturing & Service
What are the two different types of Accounting?
The Company made a sale for $60 and recieved the money today
DR. Cash 60
CR. Revenue 60
The Company made another sale of $35 but will recieve the money in 30 days
DR. Accounts Receivable 35
CR. Revenue 35
What does GAAP stand for?
Generally Accepted Accounting Principles
List 2 users of Financial Accounting information and 2 users of Managerial Accounting information.
Financial Accounting Users - Banks, Investors, Government
Managerial Accounting Users - Managers, Employees
The owner of the Company withdrew $50 from the Company
DR. Drawings 50
CR. Cash 50
The Company paid the rent for the following month of $130 in advance
DR. Prepaid Rent Expense 130
CR. Cash 130