Initial Entry Debits
What is an Asset increased by?
Debit
What is a Liability increased by?
Credit
What is a Revenue account increased by?
Credit
What is an expense account increased by?
Debit
Which financial statement shows how much a business earned and spent over a period of time.
Income Statement
Received cash for gift cards purchased by customers totaling $5,000. What is the debit?
Cash: $5,000
Used cash to purchase 1 year of insurance upfront for $12,000. What is the credit?
Cash: $12,000
$1,000 in supplies was purchased during the year. At the end of the year, supplies totaled $200. What is the debit of the adjusting entry?
Supplies Expense: $800
In April the company paid $12,000 for 1 year of prepaid insurance. As of December 31, 9 out of 12 months of prepaid insurance has been used. What is the credit of the adjusting entry?
Prepaid Insurance: $9,000
What accounts are on a balance sheet?
Asset, Liability, Owner's Equity
Used cash to purchase 1 year of insurance upfront for $12,000. What is the debit?
Prepaid Insurance: 12,000
Purchased supplies on account totaling $1,500. What is the credit?
Accounts Payable: $1,500
In April the company paid $12,000 for 1 year of prepaid insurance. As of December 31, 9 out of 12 months of prepaid insurance has been used. What is the debit to the adjusting entry?
Insurance Expense: $9,000
Employees earn $1,000 per day and are paid on Fridays. December 31 falls on a Tuesday. What is the credit of the adjusting entry?
Salaries Payable: $2,000
What comes after making adjusting entries in the accounting cycle?
A. Record transactions in the journal
B. Create financial statements
C. Prepare an adjusted trial balance
D. Identify transactions
C. Prepare an adjusted trial balance
Purchased supplies on account totaling $1,500. What is the debit?
Supplies: $1,5000
Sold services on account totaling $3,000. What is the credit?
Sales: $3,000
Customers purchased $20,000 in gift cards during the year. As of December 31, $4,000 of the gift cards have been used. What is the debit of the adjusting entry?
Unearned Revenue: $4,000
$1,000 in supplies was purchased during the year. At the end of the year, supplies totaled $200. What is the credit of the adjusting entry?
Supplies: $800
A landscaping company mows a lawn on June 30 but gets paid on July 5. The company records the revenue on July 5. What type of accounting are they using?
Cash Accounting
Sold services on account totaling $3,000. What is the debit?
Accounts Receivable: $3,000
Received cash for gift cards purchased by customers totaling $5,000. What is the credit?
Unearned Revenue: $5,000
Employees earn $1,000 per day and are paid on Fridays. December 31 falls on a Tuesday. What is the debit of the adjusting entry?
Salaries Expense: $2,000
Customers purchased $20,000 in gift cards during the year. As of December 31, $4,000 of the gift cards have been used. What is the credit of the adjusting entry?
Sales: $4,000
Which type of accounting provides a more accurate financial picture because it matches revenue with expenses.
Accrual Accounting