Chapter 1
What is the accounting equation?
Assets = Liabilities + Equity
What is the second step of the accounting cycle?
Journalize transactions.
Name one permanent account.
cash
accounts receivable
equipment
supplies
prepaid espenses etc..
A quarterly accounting period is 4 months, true or false.
False, a quarter of the year would be 3 months.
revenue and expense accounts are closed to the _____________
Income summary.
What is GAAP?
What type of account is prepaid insurance?
Asset
Depreciation is an account that usually needs to be adjusted. True or False.
True.
A prepaid job is posted to the cash account as a debit and the _______________ account as a credit.
Unearned revenue.
A classified balance sheet is one in which items are broadly grouped into assets, liabilities, and equity. True or False.
False, a classified balance sheet organizes assets and liabilities into important subgroups to provide users with more useful information for making decisions.
Revenue and Expenses can be found on this financial statement.
Income Statement.
What type of account would have the code #301?
Owner's Equity/Capital
What is ASPE?
Accounting Standards for Private Enterprise
Revenue is recognized as soon as you receive payment. True or False.
False, Revenue is recognized when the the service has been performed,
When is the closing process performed?
the closing process is performed after the financial statements are prepared.
What is IFRS
International Financial Reporting Standards.
What type of account is unearned revenue?
Liability.
What is the 7th step in the accounting cycle?
The 7th step is to prepare the financial statements.
Name one of two assets that are usually depreciated.
equipment/buildings
The income summary and the withdrawal accounts are closed to the _____________.
Owner's capital.
Capital and Withdrawals are found on which financial Statement?
Statement of changes in equity.
What do you do with the expense accounts at the end of the year?
Expense accounts are closed.
In error, the October electric bill for $240 was not included in the October 31 adjusting entries. What effect will this have on the income statement?
The income statement will be overstated.
An adjusting entry is recorded at the end of the account cycle. True or False.
False, adjusting entries are made during the 5th step of the accounting cycle.
Name two of the four asset group on a classified balance sheet.
current assets
non current assets
property plants and buildings
intangible assets