Vocabulary
What does a work sheet mean in accounting terms?
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements
What is the equation to find your net income or loss?
Revenues - expenses
How can you check to make sure you trial balance is balanced?
Make sure your debits and credits totals are equal
What is a net loss?
The difference between total revenue and total expenses when total expenses are greater
Which general ledger accounts are listed in the Trial Balance columns of a work sheet?
All general ledger accounts are listed in the Trial Balance columns of a work sheet, even if some accounts do not have balances.
What does consistency reporting in accounting mean?
When the same accounting procedures are followed in the same way in each accounting period
What are the steps to filling out the trial balance portion of an end of period worksheet?
1. Write the heading
2. Write all account titles
3. Put in all end of period debit balances
4. Subtotal debit balances, with a top line & bottom double underline
5. Put in all end of period credit balances
6. Subtotal credit balances, with a top line & bottom double underline
What are the 3 types of check endorsements?
Blank, special, restrictive
What is a check endorsement?
A signature or stamp on the back of a check transferring ownership is called an
What are 3 examples of potential errors on a work sheet?
1. There may be errors in the accounting records.
2. There may be errors in calculations.
3. An amount may be entered in the wrong column.
What is net income?
The difference between total revenue and total expenses when total revenue is greater
If you have a net loss it is a ______ on your income statement and a ______ on your balance sheet?
Credit (income statement)
Debit (balance sheet)
What is the difference between a restrictive and a special check endorsement?
A restrictive endorsement usually says "for the deposit only to..."
What is an income statement?
A financial statement showing the revenue and expenses for a fiscal period
Supplies at the end of the period - supplies on hand = supplies used during the period
What are adjusting entries?
Journal entries recorded to update general ledger accounts at the end of a fiscal period
You have a net income of $4,000, what would you do with that net income on the balance sheet to get the total? How would you check your answer?
You would add the 4,000 to your credit column subtotal. To check you final total you would see if the amount matched the total for the debit column.
You are making an adjusting entry for supplies. What two accounts are affected and how?
Supplies expense is debited, supplies is credited
What is a balance sheet?
A financial statement that reports the value of a business’s assets, liabilities, and owner’s equity on a specific date
What is the journal entry debit & credit for a service charge?
(D) Misc. Expense
(C) Cash
What is the "matching principle"?
Making sure your revenues and expenses match
What are the 9 steps to complete a bank reconciliation?
1. Write the date
2. Put the check # and amount
3. Determine service charges & find the total
4. Calculate adjusted check stub balance
5. Write the bank statement balance
6. Add outstanding deposits & find the subtotal
7. Determine outstanding checks & find the total
8. Calculate adjusted bank balance
9. Compare adjusted check stub & bank balance
How would you calculate the adjusted balance on your income statement column for insurance expense?
Take the balance of the account from the trial balance column, add the adjustment amount to get your actual balance for the fiscal year
What is the cash basis of accounting and accrual basis of accounting?
Cash basis: Reporting income when the cash is received and expenses when the cash is paid
Accrual Basis: Reporting income when it is earned and expenses when they are incurred
How would you format your
1. adjusting entries
2. subtotals
3. totals
1. debit and credit for one entry should have the same cell background color
2. subtotals get a top and bottom line
3. totals get a top line and a bottom double underline