Vocab
A list of the accounts in the ledger.
Chart of Accounts
The resources owned by a business.
Assets
On October 10, Nickle Company purchased supplies for $1,800 on account. (The Dr account, the Cr account and the amount.)
DR Supplies CR Accounts Receivable $1,800.
What is the Cash Account balance if...beginning balance was $1,500 / Cash Receipts totaled 2,000 / Cash Payments totaled $1,000 (indicate the amount and dr or cr)
1,500 + 2,000 - 1,000 = 2,500 DR
The Father of Accounting
Luca Pacioli
A group of accounts for a business.
Ledger
An account used for a proprietorship that represents the owner’s equity.
Capital
You purchased a delivery truck costing $40,000. You paid $10,000 cash down and signed a note for the balance. (The Dr account, the Cr account and the amount.)
DR Truck $40,000 CR Cash $10,000 CR Notes Payable $ 30,000
What is the normal balance for the account named Fees earned?
Credit
An error in which the order of the digits is changed, such as writing $542 as $452 or $524.
Transposition
A system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits.
Double-entry accounting
Increases in assets from performing services or delivering products to customers.
Revenues
Paid $1,200 to creditors on account.
DR Accounts Payable / CR Cash / 1,200
What is the balance in unearned revenue if the beginning balance was $1,200 and the business earned $500 of the revenue? (indicate the amount and dr or cr)
$700 CR
An entry that is prepared when an error has already been journalized and posted.
Correcting Entry
The process of recording a transaction in the journal.
Journalizing
Assets used up or services consumed in the process of generating revenues.
Expenses
Recorded $9,800 of fees earned on account.
Dr accounts receivable / Cr Fees Earned 9,800
What is the balance in the accounts receivable account if the beginning balance was 6,000. Your customer paid back 3,000 and purchased services on account for 4,000. (indicate the amount and dr or cr)
6,000-3,000+4,000 = 7,000 DR
An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.
Slide
It can be either a debit or a credit depending on whether increases in the account are recorded as debits or credits
An account used for a corporation that represents the stockholders' equity.
Retained Earnings
Quasi Company purchased a building and a plot of land for $750,000. The building was valued at $500,000 while the land carried a value of $250,000. Nickle paid $300,000 down in cash and signed a note payable for the balance.
Dr Building 500,000 Dr Land 250,000
Cr Cash 300,000 Cr Notes Payable 450,000
What is the end balance in Prepaid Insurance if the following happened this month. Your purchased a 6 month policy for $6,000. You adjusted the balance because one month of the policy expired. (indicate the amount and dr or cr)
$5,000 DR
The BIG 4 Accounting Firms
PWC, Deloitte, E & Y, KPMG