During the period
This basic financial equation states that Assets equal Liabilities plus this.
What is Stockholders' Equity?
Type of account of accumulated depreciation
What is contra-assets
This general accounting principle requires companies to update account balances for assets, liabilities, revenues, and expenses at the end of the period before financial statements are prepared.
What is accrual-basis accounting?
Types of temporary accounts
revenue, expense, dividends
Deferred Revenue account classified on the financial statements
What is Liability
A simplified visual version of a general ledger account that includes a title, a left column, and a right column.
What is a T-account?
An adjusting entry would be needed for which of the following transactions?
a. Accrued salaries
b. Services provided but unbilled
c. Interest accrued on a loan payable
d. All of the above
d. All of the above
Castle Events received a utility bill of $2,800 on December 31 for electricity used during December, which will be paid in January. Which account should be debited on December 31?
Utilities Expense (by $2,800)
Closing entries transfer the balances of temporary accounts into this permanent balance sheet account.
What is Retained Earnings?
Original cost minus Accumulated Depreciation
What is the book value of equipment
When a company pays $12,000 in advance for one year of rent, this specific asset account is debited.
What is Prepaid Rent?
To avoid confusing principal with interest owed, accountants credit this specific liability account instead of Notes Payable when accruing interest.
What is Interest Payable?
On May 1, 2027, PAL Delivery Services purchases an equipment for $48,000 cash. The truck is expected to be used in operations for 5 years with no resale value at the end. PAL calculates depreciation evenly over the 5 years. Which of the following adjusting entries should PAL record on December 31, 2027?
Debit Depreciation Expense for $6,400
Credit Accumulated Depreciation for $6,400
Unlike revenues and expenses, these general accounts are never closed at the end of the accounting period because their balances carry forward.
What are permanent accounts?
Financial statement reports operating, investing, and financing activities
What is Statement of Cash Flows
In the expanded accounting equation, these two types of accounts reduce retained earnings and are increased with debits.
What are expenses and dividends?
To verify that total debits equal total credits and that all remaining open accounts are permanent ones.
What is the post-closing trial balance?
Denny Incorporated pays its employees $5,600 every two weeks. Employees work from Monday to Sunday. The current two-week pay period ends on December 28, 2027, and employees are paid $5,600. The next two-week pay period ends on January 11, 2028. What is the adjusting journal entry for the year-end?
Debit Salaries expense by $1,200
Credit Salaries payable by $1,200
$5,600 * (3/14) = $1,200
To close revenue accounts to zero.
debit revenue and credit retained earnings
This financial statement is prepared using the adjusted trial balance to show a company's revenues and expenses over a period of time.
What is the Income Statement?
Receiving $6,000 cash in advance for future training sessions requires a credit to this specific account.
What is Deferred Revenue?
Employees earn $1,000 for a standard 5-day work week (Monday–Friday). If December 31 falls on a Wednesday, how much should be accrued for Salaries Payable at year-end?
$600
On December 1, Horizon Tech signed a $100,000, 1-year note payable with 6% annual interest rate and will pay the principle and interest to the lender on November 30. What is the required adjusting entry for the year-end?
Debit Interest Expense $500
Credit Interest Payable $500
To close expense accounts to zero.
debit retained earnings and credit expense
This financial statement presents a company's financial position by listing its assets, liabilities, and stockholders' equity at a specific point in time.
What is the balance sheet?