Accounting All-Stars

Debits & Credits

2

Explain the difference between debit and credit

Debit: Think of "debit" as increasing assets and decreasing liabilities, equity, and revenues.

Credit: Think of "credit" as increasing liabilities, equity, and revenues, and decreasing assets.

3

What is the accounting equation?

A=L+OE

4

If Cash increases, what is the corresponding entry?

Debit Cash

5

What account is increased with a debit?

Assets,Expenses

6

If Accounts Payable increases, what is the corresponding entry?

Credit Accounts Payable

Financial Statements

2

What does the statement of financial position consist of?

Asset, Liability, Equity

3

What are financial statements used for?

They are used to provide information about a company's financial performance/activities. 

4

What is the cash flow statement?

It presents the movement in cash and bank balances over a period

5

What is the balanced sheet used for?

A balanced sheet that represents the company's asset, liability, and equity

6

What is the cost incurred by the company over a period of time?

Income

The Accounting Cycle

2

How many steps are there in the Accounting Cycle?

There are 8 steps

3

What is the first step in the Accounting Cycle?

Step 1: Transactions

4

In step 3 of the Accounting cycles of a service business the individual transactions are posted from journals to ____

General ledgers

5

Which step in the accounting cycle ensures that total debits are equal to the total credits before preparing financial statements?

Step 4: unadjusted trial balance / trial balance

6

Which step of the accounting cycle is a compilation and summary of financial data from the unadjusted trial balance up tal statements?

Step 5: Worksheet

Journalizing

2

Is journaling the system by which all business transactions are recorded for the financial records?

True

3

What is the first step of the Journaling Process?

Placing the reference number

4

Is placing the account title the final step of the journaling process?

False

5

What is the chart of accounts?

Is an Index of all the financial accounts in a company's general ledger.

6

What is the second and fifth step of the journaling process?

SECOND - ACCOUNT TITLE

FIFTH - REFERENCE NUMBER

Error Correction

2

This type of error occurs when a transaction is recorded using the correct amounts and debit/credit sides, but the wrong type of account is used, violating fundamental accounting principles.

 Error of Principle

3

 This type of accounting error occurs when the initial journal entry has incorrect amounts on both the debit and credit sides.

 Error of Original Entry

4

What is the general rule for correcting an omission error?

Make the original journal entry that should have been made.

5

A company purchased a new computer and correctly debited the purchase amount. However, they debited "Repairs Expense" instead of "Equipment." What type of error is this, and how does it affect the financial statements?

Error of Principle. Expenses are overstated, and assets are understated on the balance sheet. Net income is also understated.

6

Supplies purchased for $89 were recorded as $98.  If this error is discovered before the financial statements are prepared, what is the effect on the trial balance?

The trial balance will be out of balance by $9 (the debit side will be $9 higher).