Chapter 1
Chapter 2
Chapter 3
Mixed
Mixed
100
What is the accounting equation?
Assets= Liabilities + Equity
100
What is a debit and what is a credit?
Debit= left side of the T-account Credit= right side of the T-account
100
the process by which businesses spread the allocation of a plant assets cost over its useful life
depreciation
100
What are liabilities?
Debts that are owed to creditors, can be money or a service.
100
economic resources that are expected to benefit the business in the future. Something the business owns or has control of
Assets
200
What are the two accounts that are reported on the income statement?
Revenues and Expenses
200
What does the ledger show?
increases and decreases in each account along with their balances
200
What are the 5 types of adjusting entries?
prepaid expenses unearned revenues accrued expenses accrued revenues depreciation
200
The balance sheet is a snapshot of a company's financial condition, which shows what accounts?
assets, liabilities, and stockholder's equity
200
______________ guides accounting for expenses and ensure that all expenses are recorded when they are incurred during the period, and matches those expenses against the revenues of the period
matching principle
300
What is equity and what accounts is it made of?
Equity is the owners' claim to the assets of the business. Revenue, Expenses, Common Stock, dividends
300
What accounts go up with a debit (3) and what accounts go up with a credit (3)?
Debit: Assets, Dividends, Expenses Credit: Liabilities, Common Stock, Revenue
300
_______ are completed at the end of the accounting period and record revenues to the period in which they are earned and expenses to the period in which they occur.
adjusting entries
300
What will happen if the adjusting entries are not recorded?
the balance sheet and income statement accounts will be overstated or understated, which will result in the financial statements to be incorrect
300
expenses and dividends are equity accounts that increase with a debit but common stock and revenues increase with a credit. So why are those accounts opposite of the other equity accounts?
They decrease equity
400
What are the steps to make a transaction (3 steps)?
1. identify accounts and the type of account 2. does it increase or decrease? 3. does the accounting equation balance?
400
What is a trial balance? what is the order the accounts are listed in the trial balance?
A trial balance summarizes the ledger by listing all the accounts with their balances, ensures that debits = credits Assets first, then liabilities, and then equity
400
What are two rules to remember about adjusting entries?
1. They NEVER involve cash 2. increase with a revenue account or an expense account
400
What is the difference between Prepaids and Accruals adjustments?
prepaids are: cash receipt or cash payment occurs first and accruals are: cash receipt or cash payment occurs later
400
What is the cost principle?
Acquired assets and services should be recorded at their actual cost
500
What is the order in which you prepare the financial statements? and what is the relationship between them?
Income statement, statement of retained earnings, and the balance sheet. relationship: net income/loss from the income statement is carried to the statement of retained earnings, then the retained earnings ending balance is carried to the balance sheet
500
What are the 5 steps in journalizing and posting transactions?
1. identify the accounts and the account type 2. does it increase with a debit or credit 3. record the transaction in the journal 4. post the journal entry to the ledger 5. does the accounting equation balance?
500
___________ requires companies to record revenue when it has been earned and determines the amount of revenue to record
Revenue recognition principle
500
What is the difference between the trial balance and the balance sheet?
A trial balance verifies the equality of debits and credits and is an internal document used only by employees of the company. The balance sheet presents the business's accounting equation and is a financial statement that can be used by both internal and external users.
500
what is accumulated depreciation? and what is its normal balance?
is the sum of all depreciation expense recorded for the depreciable asset to date. It is a contra asset account, meaning that it behaves opposite from other assets and increases with a credit
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