Financial Statements
The statement that reports revenues minus expenses for a period of time.
Income Statement
A debit increases what three "buckets" of accounts
Asset, Expenses & Dividends
This account is never included in an adjusting entry
Cash
This principle requires companies to record expenses in the same period as related revenues.
Matching Principle
The two categories of stockholder's equity
Retained Earnings & Contributed Capital
The financial statement that represents a snapshot in time
Balance Sheet
To record cash received from a customer for services performed, cash is debited and this account is credited.
(Service) Revenue
This type of adjusting entry records expenses that have been incurred but not yet paid
Accrued Expense
The characteristic of accounting information that requires companyies to include any information that could influence a financial statement user's decision?
Full Disclosure Policy
The Journal
This statement should be created first in year-end procedures
Income Statement
A credit increases these three "buckets" of accounts
At the end of the month, salaries of $2,000 are owed to employees but unpaid. What journal entry would you make?
Dr. Salaries Expense
Cr. Salaries Payable
The two fundamental characteristics of useful information as identified by the FASB
Relevance & Faithful Representation
This step updates certain accounts before preparing the financial statements
Adjusting Entries
The Statement of Cash Flows is broken up into what three sections?
Operating, Investing & Financing
Describe the journal entry that would be recorded when a company pays a liability in cash.
Dr. Liability
Cr. Cash
When discussing the four enhancing characteristics of financial information, what is the difference between comparability and consistency?
Comparability = Company to Company
Consistency = Same Company but year to year
The formula for the current ratio
What is the difference in single-step and multi-step income statement
Single = Revenues - Expenses = Net Income
Multi = Gross Profit -> Operating Income -> Net Income
What kind of account is accumulated depreciation and what is its normal balance?
Contra-Asset & Credit
If an adjusting entry for unearned revenue is not recorded, liabilities will be ______ and revenues will be ______.
Overstated & Understated
Requires revenue to be recognized or recorded in which it is earned and the collection of cash is reasonably assured.
Revenue Recognition
After adjusting entries, this account appears on both the income statement and balance sheet. Serves as a "bridge" between the two
Retained Earnings