Accounting 101
This principle states that all revenue must be reported when it is realized and earned, not necessarily when the actual cash is received. This is also known as accrual accounting.
What is the revenue recognition principle
Taxes paid in money you're still owed.
What is accrual accounting?
Identify the 5 major steps in the accounting cycle
What are 1) analyze 2) record 3) adjust 4) report 5) close
What is cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
What is current assets?
Which accounts are closed at year-end
What is temporary accounts?
The systematic method of recording a business's economic transactions so that internal and external users can use the information to make business decisions.
What is Accounting?
What four different types of adjustments are frequently necessary at the close of an accounting period? Give examples of each
1.What is deferred (unearned) revenue
2. What is deferred (prepaid) expenses
3. What is accrued revenue
4. What is accrued expenses
Summarize the accounting rules
What is
▪Increases in assets are debits; decreases in assets are credits.
▪Increases in capital are credits; decreases in capital are debits.
▪Increases in liabilities are credits; decreases in liabilities are debits.
▪Increases in incomes and gains are credits; decreases in incomes and gains are debits.
▪Increases in expenses and losses are debits; decreases in expenses and losses are credits.
States that companies should be able to record their financial activities during a certain period of time.
Periodicity Assumption
Consider the following transaction : Purchased supplies on account. Describe the effect of this transaction on the assets of the company.
What is an increase in assets and an increase in liabilities. Debit: Supplies, Credit: Accounts Payable
This statement should prove that the accounting formula "Assets = Liabilities +Owner's Equity" is in check because the asset side should equal the combined totals of liabilities and owner's equity.
What is Balance Statement?
1)Identify the accounts affected 2)Classify the account affected 3)Determine the amount of increase or decrease for each account affected 4)Make sure the accounting equation remains in balance
What is analyzing a business transaction?
Which line of the general journal should be indented?
What is the credits?
Furniture is recorded at its cost of $12,000 not its market value of $16,000
What is the Historical Cost Principle?
It was established to improve uniformity, comparability, and clarity of financial information
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What is GAAP
Which account balance increases when it is debited and decreases when it is credited?
What is a expense account?
The debit or credit balance that’s normally expected from a certain account.
What is a normal account balance?
A journal entry containing more than one debit entry or one credit entry
What is a compound journal entry?
The concept that the business and the owner of the business are separate entities and should be accounted for separately. This concept also applies to different businesses.
What is Economic Entity?
Changes in owner's equity that result from investments or withdrawals of assets by the owner are included in the
What is the statement of owner's equity?
The chart of accounts is
What is a list of all asset, liability and owners' equity accounts ?