General Accounting
What is the Balance Sheet?
This financial statement reports a company's financial position at a specific point in time.
The accounting equation must remain in balance after every transaction.
True
What is Equity?
The value of a business that belongs to the owners (or shareholders) after all debts are paid.
What are current assets?
These are assets that can be converted into cash within one year, such as inventory or accounts receivable.
What is the accounting cycle?
8-step process for recording, analyzing, and reporting a company's financial transactions over a specific period
What is the Income Statement?
This statement shows the profitability of a company over a period of time.
Asset accounts are listed on the right side of the accounting equation.
False (on the left)
If Total Assets are $150,000 and Liabilities are $50,000, What is the total Equity?
What is $100,000?
What are tangible assets?
This term refers to resources that have physical substance, such as machinery, buildings, and land.
What are the 8 steps of the Accounting Cycle?
identifying, journaling, posting to the ledger, calculating a trial balance, adjusting entries, creating an adjusted trial balance, generating financial statements, and closing books
What is a Trial Balance?
This report lists all accounts in the general ledger and their balances to ensure debits equal credits.
Total assets represent the exact amount the owner has invested in the business.
False (Assets are resources owned; equity is the owner's claim)
These are the two primary sources of stockholder’s equity.
Contributed Capital and Retained Earnings
What is inventory?
This represents the cost of goods held for sale in the normal course of business.
What is the purpose of the unadjusted trial balance?
To verify that total debits equal total credits before adjustments.
What are Adjusting Entries?
These entries are made at the end of an accounting period to record revenues earned or expenses incurred
A withdrawal by the owner increases equity.
False (It decreases equity)
What is Treasury Stock?
This type of stock has been issued but subsequently repurchased by the company.
What are intangible assets?
These are non-physical assets like patents, copyrights, and trademarks
What is the fundamental accounting equation?
Assets = Liabilities + Equity.
What is the Chart of Accounts?
The list of all account names and numbers used by a company.
Equity accounts typically increase with debits.
False (They increase with credits)
What is a Stock Dividend?
This type of dividend distribution increases the number of shares outstanding and decreases retained earnings, but does not affect total equity.
What is accounts receivable?
This account represents the amount of cash to be collected from customers after the business delivers its products or services.
If a company receives a cash advance, how is it recorded?
Increase Assets (Debit) and Increase Liabilities (Credit)