Chapter 2
List three examples of an asset.
cash
A/R
Supplies
Equipment
Prepaid rent/ insurance
Building
Car
What side is your debit on?
Left
The safest endorsement on a check is a
Restrictive endorsement
Some internal controls for petty cash funds should be kept in a safe, locked cash box, or a locked drawer.
True or False
True
List the financial statements in order
Income Statement
Statement of Owners Equity
Balance Sheet
What side your credit on?
Right
Financial statement that is reported as of a specific date
Balance Sheet
The gross pay of an hourly employee is determined by subtracting the overtime premium from the regular earnings.
True or False
False
Give one example of a liability
A/P
Loans Payable
Why do accountants use a t-chart?
To analyze transactions
Most businesses use the petty cash fund to pay for
Small expenditures
Purchases is a temporary _______ account.
Expense
What does the Income Statement show you?
Revenue - Expenses= Net Income or Loss
Transaction:
Derrick invested $70,000 cash in the business.
Debit Cash
Credit Capital
After the closing entries are posted to the ledger, each expense account will have
Zero balance
Accrued expenses are
Used in one period but not paid for until a later period
What is the accounting equation?
Assets= Liabilities + Owners Equity
Transaction:
Performed services for cash amounting to $7,000.
Debit Cash
Credit Fees income
The review of financial statements to assess their fairness and adherence to GAAP is
Auditing
Another name for permanent accounts is
Real Accounts