The Accounting Equation & Transactions
Write the accounting equation and define its three components.
Assets= Liabilities +Shareholder's Equity
Assets- What we own
Liabilities- What we owe
SE- the Shareholder's stake/ financial rights to the assets of the business after liabilities are paid
The side on which an account increases is considered the "_______ ________"
Normal Balance
Cash T-account shows: Beg. 5,000 (Dr), received 12,000 (Dr), paid 9,000 (Cr), and paid 3,000 (Cr). What is the ending balance?
5,000 + 12,000 – 9,000 – 3,000 = 5,000 debit balance.
Events occurring within the company, for example, using some assets to create an inventory product.
Internal Event
In what classic novel does the character Jay Gatsby reside?
The Great Gatsby
What are the two ways a business can obtain resources to invest in assets?
Debt and Equity Financing
If Supplies has a $22,000 debit, $3,000 credit then a $2,000 debit what is the final balance?
A collection of all accounts and their balances
Ledger
Assets = $200,000, Liabilities = $80,000, and Common Stock = $50,000, what are Retained Earnings?
$70,000.
In the Harry Potter series, what is the name of Harry's owl?
Hedwig
Bought a Vehicle for $78,000 and Supplies for $4,000; paid $26,000 in cash and signed a 2 year note for the remainder.
Vehicles- 78,000
Supplies- 4,000
Notes Payable- 58,000
Cash -24,000
What is the normal balance for Notes Payable? What is the normal balance for dividends?
Debit/ Debit
Explain how you can tell if a transaction has been posted to the ledger.
Post reference column is filled with the account number
A business reports Equipment of $100,000 and Market Value of $90,000. According to the “lower of cost or market principle,” what value goes on the balance sheet?
90,000
Which mythical creature is said to be half-man, half-bull?
The Minotaur
If a company purchases $9,600 of equipment on account, which classifications and accounts are affected?
Equipment- Asset
Accounts Payable- Liability
The book of original entry where transactions are first recorded in debit/credit form.
General Journal
When will the trial balance total for debits not equal the total credits?
When there is an error
Assets (6 items)
Cash – $15,000
Equipment – $30,000
Accounts Receivable – $10,000
Land – $40,000
Supplies – $5,000
Building – $50,000
Liabilities (3 items)
Accounts Payable – $12,000
Notes Payable (5 years) – $25,000
Mortgage Payable – $40,000
30,000/12,000 This is a good current ratio!
What is the capital city of Australia?
Canberra
Our shareholder Jerry sells his stock to Becky for $15,000. What is the journal entry we record?
A company buys $5,000 of supplies on account and pays $2,000 of it later. Write both journal entries.
Purchase: Supplies (Dr) 5,000; Accounts Payable (Cr) 5,000.
Payment: Accounts Payable (Dr) 2,000; Cash (Cr) 2,000.
A list of all account balances at a single point in time used to check equality of debits and credits.
Trial Balance
A balance sheet that separates current and noncurrent items
Classified Balance Sheet
In Norse mythology, what is the name of the rainbow bridge that connects the human world (Midgard) with the realm of the gods (Asgard)?
Bifröst