Accounting 101
This asset is considered the KING
Cash
GAAP
What account(s) are affected when sales are on credit? (specified which account is debited and credited)
Debit: AR
Credit: Sales Revenue
This financial statement reports Revenue and Expenses to derive at Net Income.
Income Statement
What is the accounting equation?
Asset = Liabilities + Owner's Equity
What is the asset account that is typically associated with sales on credit?
Account Receivable
What is the accounting principle that matches expense to revenue?
Matching Principle or Expense recognition Principle
What account(s) are affected when company received advance cash payment for rent? (specified which account is debited and credited)
Debit: Cash
Credit: Unearned Revenue
This financial statement reports the financial position of a company at a point in time (assets, liabilities & owners equity).
Balance Sheet
What are the two methods to prepare the statement of cashflows?
Direct and Indirect Methods
What group relies on accurate and useful financial information? Name three.
Creditors
Investors
Regulators
Suppliers
Customers
The collection of all accounts and their balance is called? (hint: AKA - T Accounts)
General Ledger
What account(s) are affected when company prepaid cash for insurance in advance? (specified which account is debited and credited)
Debit: Prepaid insurance
Credit: Cash
This statement report how retained earnings changes over the reporting period.
Statement of Retained Earnings or Statement of Owner's Equity
What are the two basis of accounting?
Cash and Accrual
What is the simple definition of accounting?
To record and report financial information
What is the name of the system that records all financial transactions and involves two accounts with at least one debit and one credit?
What account(s) are affected to adjust for depreciation? (specified which account is debited and credited)
Debit: Depreciation Expense
Credit: Accumulated Depreciation
This statement report the inflow and outflow of cash.
Statement of Cash Flows
What are the three allowance methods to account for bad debt (debt that are estimated to be uncollectible)?
Percent of sales
Percent of account receivable
Aging of account receivable
What are the three factors in the fraud triangle that push a person to commit fraud?
Opportunity
Pressure
Rationalization
What are the two account classifications where one set of account balances is closed out at the end of the period and the other set of account balances is carried forward to a later period?
Temporary and Permanent
During the closing entry process at the end of the period, what account is used to close the revenue account balance into?
Income Summary
What is the order in which the financial statement must be prepared?
Income Statement
Statement of Retained Earnings/Statement of Owner's Equity
Balance Sheet
Statement of Cash Flows
What is the accounting term for Accumulated Depreciation, Allowance for Bad Debts, and Bond Discount?(Hint: it reduces the main account to carry value or book value)
Contra Asset Account