Fundamentals
Under this basis, we record transactions at the time cash is exchanged.
What is Cash-Basis Accounting?
Accounts Receivable has a normal balance of this.
What is Debit?
Paying off a bank loan with cash:
What is Debit Notes Payable, Credit Cash
On July 1, 2024, Rogers received $5,400 from a customer for advertising services to be given evenly over the next 10 months. Rogers credited Deferred Revenue on July 1. The adjusting entry is this on December 31st.
What is Debit Deferred Revenue $3,240 and Credit Service Revenue $3,240.
This is the first step of the accounting cycle.
What is Analyze Transactions?
What is Accrual-Basis Accounting?
Accounts Payable is decreasing, so this is needed.
What is a debit?
Providing service to customer on account:
What is Debit Accounts Receivable, Credit Sales Revenue
At the end of the year, income taxes owed are $6,400. The adjusting entry is this for December 31st.
What is Debit Income Tax Expense $6,400, Credit Income Tax Payable $6,400.
This is the second step in the accounting cycle.
What is Record Transactions in Journals?
This financial statement measures the financial position of a company at a point in time.
What is the balance sheet?
Prepaid rent is decreasing, so this is needed.
What is a credit?
Issue common stock to stockholders:
On May 1, 2024, the company paid $4,080 for a two-year fire and liability insurance policy. The company debited Prepaid Insurance on May 1. The adjusting entry is this on December 31st.
What is Debit Insurance Expense $1,360, Credit Prepaid Insurance $1,360.
This is the third step in the accounting cycle.
What is Post Journal Entries to the Ledger?
Set of accounting rules, standards, and procedures issued by the Financial Accounting Standards Board (FASB).
What is GAAP?
Sales revenue is increasing, so this is needed.
What is credit?
What is Debit Cash, Credit Accounts Receivable
On September 1, 2024, the company borrowed $14,000 from a local bank and signed a note. Principal and interest at 12% will be paid on August 31, 2025. This is the adjusting entry on December 31st.
What is Debit Interest Expense $560, Credit Interest Payable $560.
This is the fourth step of the accounting cycle.
What is Prepare Trial Balance ?
The number of accounting months between August 1st and April 1st.
What is 8.
Deferred Revenue has a normal balance of this.
What is Credit?
Customer pays for service 1 month in advance:
What is Debit Cash, Credit Deferred Revenue?
At year-end there is a $2,400 debit balance in the Supplies (asset) account. Only $940 of supplies remains on hand at the end of the year. This is the adjusting entry on December 31st.
This is the fifth and final step of the accounting cycle.
What is Prepare Financial Statements?