Definitions
Debits and Credits
Company X had sales of $10,000 for the month, 3/4 of which were in cash.
Cash 7,500
Accounts Receivable 2,500
Sales Revenue 10,000
What type of of adjustments are needed if cash is received first and the service is preformed later? What if the service is preformed first?
Deferral.
Accrual.
What financial statement has a heading with the text "At ..." instead of "For the period ended..."?
Balance Sheet
Purchased supplies for $15,000.
Supplies 15,000
Cash 15,000What is the difference between the cash basis of accounting and the accrual basis?
In the cash basis, transactions are only recorded when cash exchanges hands, however in the accrual basis, transactions are recorded whenever an action is completed.
Company X issued 5,000 shares at $20 per share.
Cash 100,000
Common Stock 100,000
Depreciation for the year totaled $25,000. Record the journal entry.
Depreciation expense 25,000
Accumulated depreciation 25,000
What is the order the financial statements are created?
Income Statement, Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows
What is the Accounting Equation?
Assets = Liabilities + Stockholders' Equity
What are contra-accounts? Provide an example.
An account that decreases the balance of a specific account.
Accumulated Depreciation
Received $150,000 for services to be conducted over the next three months.
Cash 150,000
Deferred Revenue 150,000Daily Double
What types of accounts are always used in adjustments? Which account is never used?
A revenue or expense and an asset or liability.
Never cash.
What is the value that is transitioned from each financial statement to the next(Not Statement of Cash Flows)?
Net income from the Income Statement to Statement of Retained Earnings. Ending retained earnings from the Statement of Retained Earnings to the Balance Sheet.
Salaries and utilities in February were $10,000 and $3,000 respectively, these will be paid for in March.
Salaries and wages expense 10,000
Utilities expense 3,000
Salaries and wages payable 10,000
Utilities payable 3,000
What is meant by current assets and current liabilities?
A asset that can be liquified in under a year or a liability that must be paid off in under a year.
Took out a 3 year note worth $80,000 at 7% with semiannual interest payments.
Cash 80,000
Notes Payable 80,000
Complete 2 journal entries.
1/1. Paid upfront for a year's worth of rent totaling $60,000.
2/28. Record the use of rent previously paid for on 1/1.
Prepaid Rent 60,000
Cash 60,000
Rent Expense 10,000
Prepaid Rent 10,000
Daily Double
What are the types of activities for the Statement of Cash Flows and which order do they go in?
Operating, Investing and Financing
Supplies had a beginning balance of $1,500. Debits for the period were: 3,000, 5,000, and 2,500. After counting the supplies on hand there was only $2,000, record the journal entry.
Supplies expense 10,000
Supplies 10,000
What is the accounting process?
The process in which information is taken in, recorded and used to create information useful to both internal and external users.
Purchased land with an appraised value of $500,000 for $600,000. The land also had machinery on it with an appraised value of $250,000.
Land 400,000
Equipment 200,000
Cash 600,000
Using the partial trail balance, complete a closing entry.
Sales Revenue 45,000
Salaries and Wages Expense 20,000
Utilities Expense 5,000
Depreciation Expense 12,500
Sales Revenue 45,000
Salaries and Wages Expense 20,000
Utilities Expense 5,000
Depreciation Expense 12,500
Retained Earnings 7,500
With only headings and subheadings, create a Balance Sheet.
Assets
Current Assets
Total Current Assets
Total Assets
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
Total Current Liabilities
Total Liabilities
Stockholders' Equity
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
What's my favorite color?
Red