Balance Sheet
What is the accounting equation?
Assets = Liabilities + Stockholders' Equity
What is the equation that represents the income statement?
Revenue - Expenses = Net Income
What does debit mean?
Left
Torero Corporation paid $7,000 in dividends. What is the journal entry?
(What account(s) do you debit and for how much, what account(s) do you credit and for how much)
Dr. Dividends $7,000
Cr. Cash $7,000
What financial statement do dividends appear on?
Statement of Stockholders' Equity
What type of account is Prepaid Insurance?
Asset
What are the two accounts that make up stockholders' equity?
Common Stock and Retained Earnings
If you want to increase the Prepaid Rent account, do you debit or credit?
Debit
Torero Corporation purchased $75,000 of equipment on account. What is the journal entry?
(What account(s) do you debit and for how much, what account(s) do you credit and for how much)
Dr. Equipment $75,000
Cr. Accounts Payable $75,000
Which type of business organization has the disadvantage of no limited liability?
Sole Proprietorship or Partnership
What order are the assets listed on the balance sheet?
In order of liquidity
What links the income statement and statement of stockholders' equity?
Net Income
If Deferred Revenue has a normal balance of $25,000, is that a debit or credit balance?
Credit
Torero Corporation collected $65,000 from customers they previously provided services to. What is the journal entry?
(What account(s) do you debit and for how much, what account(s) do you credit and for how much)
Dr. Cash $65,000
Cr. Accounts Receivable $65,000
Which financial statements(s) are presented at a point in time?
Balance Sheet
Given the following information, what is the total assets for Torero Corporation:
Cash $15,000; Accounts Receivable $5,000; Supplies $500; Equipment $10,500; Accounts Payable $1,000; Notes Payable $25,000; Common Stock $3,000
$31,000
($15,000 + $5,000 + $500 + $10,500)
Cash + A/R + Supplies + Equipment
Given the following information, what is the net income for Torero Corporation:
Revenue $100,000; Cost of Goods Sold $75,000; Rent Expense $5,000; Dividends $1,000
$20,000
($100,000 - $75,000 - $5,000)
If a company pays cash to a vendor for supplies they previously bought the prior month, what account do they debit?
Accounts Payable
Dr. A/P
Cr. Cash
Torero Corporation owes the government $15,000 in taxes that they will pay next year. What is the journal entry?
(What account(s) do you debit and for how much, what account(s) do you credit and for how much)
Dr. Tax Expense $15,000
Cr. Taxes Payable $15,000
What is the name of the formal accounting standards in the U.S.? (full name, not acronym)
Generally Accepted Accounting Principles
Given the following information, what is the total stockholders equity for Torero Corporation:
Cash $15,000; Accounts Receivable $5,000; Supplies $500; Equipment $10,500; Accounts Payable $1,000; Notes Payable $25,000; Common Stock $3,000
$5,000
($31,000 - $1,000 - $25,000)
Given the following information, what is the ending retained earnings for Torero Corporation in Year 1:
Revenue $50,000; Utilities Expense $20,000; Salaries Expense $10,000; Dividends $5,000
$15,000
$0 + ($50,000 - $20,000 - $10,000) - $5,000
Beg R/E + Net Income - Dividends = End R/E
What is the name of the collection of all T-accounts with the individual transactions and resulting account balance?
General Ledger
Torero Corporation sold $300,000 of inventory to customers on account. Previously, Torero Corporation paid $100,000 for that inventory. What are the two journal entries?
(What account(s) do you debit and for how much, what account(s) do you credit and for how much)
Dr. Accounts Receivable $300,000
Cr. Revenue $300,000
Dr. Cost of Goods Sold $100,000
Cr. Inventory $100,000
What are the two functions of financial accounting?
1) Measures business activities of a company and
2) Communicates this information to external users