Basics
What is the accounting equation
Assets = L + OE
I prepaid 3 months rent for $3,000 to my landlord. What is the journal entry?
Prepaid Rent $3,000
Cash 3,000
If I PURCHASE inventory for my business, when do I acknowledge the discount? Upon purchase or upon payment
Payment
What is the conservatism principle
a business should report the least favorable figures in the financial statements
Issued 3,000 share of $1 par value common stock issued at $5 per share. What is the journal entry?
Cash 15,000
Common stock 3,000
Paid in excess 12,000
What is the normal balance of unearned revenue
credit
I prepaid rent on 12/1 for 3 months for $3000. At 12/31, what is my journal entry to record one month of rent?
Rent expense 1,000
Prepaid rent 1,000
If I SELL merchandise when do I acknowledge the discount? Upon purchase or upon the sale
Sale
What is the Materiality Concept
a company must perform strictly proper accounting procedures only for items worth a significant amount.
What is the journal entry for double declining balance
Name 3 assets that are NOT current assets
Land, building, equipment, intangible
I have $2,500 in revenue at the end of the year. What is the journal entry to close out revenue at the end of the year.
Revenue 2,500
income summary 2,500
on 1/10/24 I purchased $12,000 worth of inventory on account 2/10, n/30. Write the journal entry
A/P 12,000
During rising inventory costs, when would COGS be hights - FIFO or LIFO
LIFO
What are the two methods for accounting for bad debt that you must consider the TARGET BALANCE setting up bad debt expense
% of receivables
aging of receivables
In the equity section:
Equity = Common Stock +/- what three things (think about closing entries)
+ Revenue - Expense - Dividends
If we do NOT accrue salary expense at 12/31, what is the effect on Net Income
Overstated
I purchased 12,000 worth of inventory on 1/10/24 2/10, n/30 on account.
On 1/13 I paid the invoice. Write the journal entry
A/P 12,000
Merchandise inventory 240
Cash 11,760
What is lower-cost-of-market
If assets are $9,000,000, liabilities are $1,000,000 and we pay $10,000,000 to purchase the company, what is the journal entry to purchase the company including goodwill?
Assets 9,000,000
Goodwill 2,000,000
Liabilities 1,000,000
Cash 10,000,000
What are the 4 closing journal entries - in order
close out revenue, expense, i/s, dividends
I sell inventory to West Company for $7,500 2/10, n/30. West company pays the invoice 14 days later. What is the journal entry to record the payment of the invoice?
Cash 7,500
A/R 7,350
Sales Discount Forfeited 150
If inventory declines in market value by $800, what is the journal entry that has to be made
COGS 800
Merch Inv 800
What expense account is debited when paying EMPLOYEE salary, taxes and benefits
What expense account is debited when paying EMPLOYER portion of the taxes
Salaries and Wages Expense
Payroll Tax Expense