Definitions
The Accounting Equation
What is Assets = Liabilities + Equity?
Borrowed $50,000 from a bank
What is a Debit: Cash $50,000 Credit: Notes Payable $50,000
The type of account that Prepaid Expenses is
What is an Asset?
The three accounts make up the balance sheet
What are Assets, Liabilities, and Equity?
A type of business that has one owner
What is a sole proprietorship?
Resources of the company
What are Assets?
An investor purchased $20,000 of common stock for our company
What is a Debit: Cash $20,000 Credit: Common Stock $500
A liability representing a company's obligation to provide goods or services to customers in the future
What is Unearned Revenue?
The statement in which dividends can be found
What is the Statement of Retained Earnings?
Net effect when you pay $2,500 to purchase equipment.
No effect
Equipment (Asset): Increases
Cash (Asset): Decreases
The side of the account that is increased
What is the Normal Balance?
You provided service to customers for $15,000 on account
What is a Debit: Accounts Receivable $15,000 Credit: Service Revenue $15,000
Journal Entry when Costco receives $120,000 on January 1, 2017 for memberships for the upcoming year
What is Debit: Cash $120,000 Credit: Unearned Revenue: $120,000
Order in which the three financial statements are prepared
What is Income Statement, Statement of Retained Earnings, and Balance Sheet?
Land when:
Cash = $8,500
Accounts Receivable = $7,200
Notes Payable = $12,500
Common Stock = $3,000
Retained Earnings = $6,600
What is $6,400?
An increase in owner's equity resulting from the operation of a business (transaction for the sale of goods or services).
What is a Revenue?
Purchased $20,000 in equipment, paying $16,000 in cash and the rest on account
What is a Debit: Equipment $20,000 Credit: Cash $16,000 and Account Payable $4,000
Delta Airlines sells a tick to a customer one month before his flight.
Accrued Revenue
Accrued Expense
Deferred Revenue
Deferred Expense
What is a Deferred Revenue?
Net Income when:
Revenues = $15,000
Expenses = $3,000
Dividends = $1,000
What is $12,000?
Net Income = Revenues - Expenses
Net Income = $15,000 - $3,000
Balance in T-account when Debits for Cash are:
$10,000
$6,200
$7,300
Credits for Cash are:
$5,000
$3,200
$1,400
What is $13,900?
The cost of operating the business, incurred to generate revenues in the period covered by the income statement
What is an Expense?
Paid $500 for supplies we purchased at an earlier date
What is a Debit: Accounts Payable $500 Credit: Cash $500
A company pays rent for the upcoming year on January 1.
Accrued Revenue
Accrued Expense
Deferred Revenue
Deferred Expense
What is a Deferred Expense?
Calculation for ending retained earnings
What is Beginning Retained Earnings + Net Income - Dividends?
Depreciation recorded each year for a $50,000 truck with a useful life of 8 years.
What is $6250?