Financial Statements
If revenues are greater than or equal to expenses, the income statement reports a _________.
Net Income
Accounts that track activity over a single accounting period and get closed out at the end of each accounting period are ___________.
Temporary Accounts
In a vertical analysis, all numbers of the income statement are compared to this base number:
What is the difference between a checking and savings account?
A checking account is a deposit account that allows for simple and frequent cash transactions; a savings account is an interest earning account that has limits on withdrawals.
What is the process of comparing the cash balance on the balance sheet with the cash balance on the bank statement?
Reconciliation
What accounts are included in an income statement?
Revenue and Expenses
To close out the income statement accounts, use an account called ______________.
Income Summary
________ is a standard by which financial metrics can be compared.
Benchmark
A company implements the following policy: “Employees who write checks are not authorized to sign those checks. They must be signed by a designated authorized check signer.” Which cash control is this an example of?
Separation of Duties
A ______________ is a monthly report prepared by a bank for the account holder outlining all account transactions in a given month.
Bank Statement
The __________ is a financial statement that summarizes the total revenues and expenses of an organization, and the resulting profit or loss over a specific accounting period.
Income Statement
A company’s income statement shows $4,000 in service revenue for an accounting period. What is the journal entry used to close out revenue at period end?
Service Revenue $4,000
Income Summary $4,000
A company reports $15,000 in total assets, $5,500 in total liabilities, and $9,500 in owners’ equity. What is the company’s debt ratio, rounded to the nearest whole number?
37%
How would you write out $6,250.00 in words when writing a check?
Six thousand two hundred fifty and 00/100
When reconciling the book balance of cash to the checking account balance, an accountant notices a $30 account maintenance fee that is present on the bank statement, but not on the books. What type of adjustment is needed to correct this difference?
$30 Book Adjustment
What is the purpose of a balance sheet?
To prove that assets equal liabilities plus owners’ equity at any given time
A company’s income statement shows $500 in insurance expense for an accounting period. What is the journal entry used to close out this expense at period end?
Income Summary $500
Insurance Expense $500
A company reports $6,500 in revenue and $4,400 in expenses for an accounting period. What is the net profit margin for this period, rounded to the nearest whole number?
32%
A company establishes a petty cash fund by making a $500 cash withdrawal from their checking account. The petty cash will be used for small office expense purchases. What is the journal entry booked to record this transaction?
Petty Cash $500
Cash $500
True or False: If a check received by a company has non-sufficient funds by the payor, the company would record the amount of the check as a debit to accounts receivable.
True!!
The balance sheet reports financial information __________, in contrast to the income statement which reports financial information ____________.
a. At the end of the year, at the end of the accounting period.
b. At the end of the accounting period, at the end of the year.
c. Over a period of time, at a moment in time.
d. At a moment in time, over a period of time.
D
At period end, the income summary account is __________.
Closed out to Owners’ Equity (Owners’ Capital) using a closing journal entry
The act of borrowing money to purchase assets:
Leverage
At period end, the petty cash report shows three transactions. $25 spent for office supplies, $5 for coffee, and $10 for parking. What journal entry is used to record these transactions, assuming petty cash will not be immediately replenished.
Office Expenses $25
Meals & Entertainment $5
Travel Expense $10
Cash $40
A company writes a check on June 30th for $600 and mails it to a contractor. When reconciling the cash account with the bank account balance later that day, what difference should the accountant expect to see, if any?
$600 bank adjustment