The Accounting Equation
Debits & Credits
General Journal
Accounting Principles
It's All Business!
100
Financial rights to the assets of a business.
What is equity?
100
A business activity that changes assets, liabilities, or owner's equity.
What is a transaction?
100
The side of a T-Account that is increasing.
What is the normal balance?
100
A planned process for providing financial information that will be used by management to review financial activities?
What is an accounting system?
100
The type of business ownership where one individual owns a company and has no legal separation between them and the business.
What is a sole proprietorship?
200
Explain the accounting equation in mathematical terms.
What is Assets = Liabilities + Owner's Equity?
200
A sale for which cash will be received at a later date.
What is sales on account (accounts payable)?
200
The accounting concept applied when a business' transactions are stated in numbers that have common values ($).
What is Unit of Measurement?
200
The reports that summarize the financial condition and operations of a business? These include the income statement, balance sheet, and cash flow statement.
What are financial statements?
200
A list of accounts used by a business and separated by numbers for each account type.
What is a chart of accounts?
300
The account used to summarize the owner's equity in a business.
What is capital?
300
The normal balance side of any expense account.
What is a debit?
300
A list of accounts used by a business.
What is a "chart of accounts"?
300
Type of accounting in which each transaction has an affect on two accounts, which assures that debits equal credits.
What is "double-entry accounting"?
300
Explain GAAP, what it stands for and why it is important.
What is Generally Accepted Accounting Principles, and these are the rules and standards that accountants follow while recording and reporting financial activities?
400
State in full accounting terminology how you would enter the following transaction: An owner withdrawals $2,500 from their business.
What is a debit to the withdrawal account, and a credit to the cash account?
400
The accounting concept applied when revenue is recorded at the time goods or services are sold.
What is Realization of Revenue?
400
These four items are recorded for each transaction entered in a journal.
What are “date, account title, document number, and debit/credit”?
400
The amount of money owed to the creditors of a business for property or services purchased.
What is "accounts payable"?
400
The four phases of the economic cycle.
What are “prosperity, recession, depression, recovery”?
500
Find owner’s equity for a company that has accounts receivable of $400, $900 cash, $230 of supplies, accounts payable of $280, and prepaid insurance of $150.
What is “$1,400”? Assets = Liabilities + Owner’s Equity $400+900+230+150 = $280 + x X = $1,400
500
Three accounts that affect owner’s equity.
What are “expenses, capital, withdrawals, sales, etc.”?
500
This is done when errors are made in a general journal and items must be corrected.
What is “draw a neat line through the item and write the correct item above the canceled item”?
500
True or False: Expenses such as utility bills, advertising expenses, and miscellaneous expenses all affect the owner’s equity account and are credited.
False: owner’s equity is reduced by these expenses, meaning they are debited since the normal balance side on the right side of the accounting equation is credits.
500
Name a large U.S. accounting firm that does business globally.
Who are “Deloitte, PwC, Ernst & Young, or KPMG, Grant Thornton, BKD,…”?
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