Vocab
The side (debit or credit) where an account's balance normally increases
Normal Balance
On October 10, Nickle Company purchased supplies for $1,800 on account. (The Dr account, the Cr account and the amount.)
DR Supplies CR Accounts Receivable $1,800.
What is the Cash Account balance if...beginning balance was $1,500 / Cash Receipts totaled 2,000 / Cash Payments totaled $1,000 (indicate the amount and dr or cr)
1,500 + 2,000 - 1,000 = 2,500 DR
What is the left and right side of a T account called?
Left - Debit
Right - Credit
This basis of accounting record revenue and expenses when they are incurred, regardless of when cash is received or paid.
Accrual Basis Accounting
A list of the accounts in the company's ledger
Chart of Accounts
You purchased a delivery truck costing $40,000. You paid $10,000 cash down and signed a note for the balance. (The Dr account, the Cr account and the amount.)
DR Truck $40,000 CR Cash $10,000 CR Notes Payable $ 30,000
What is the normal balance for the account named Fees earned?
Credit
The Normal Balance for Assets
Debit
Name 2 of the BIG 4 Accounting Firms
PWC, Deloitte, E & Y, KPMG
The financial statement that shows the debit or credit balance for all the company's accounts.
Trial Balance
Paid $1,200 to a creditor
DR Accounts Payable / CR Cash / 1,200
What is the balance in unearned revenue if the beginning balance was $1,200 and the business earned $500 of the revenue? (indicate the amount and dr or cr)
$700 CR
The Normal Balance for Withdrawals
Debit
The Father of Accounting
Luca Pacioli
The system where every financial transaction is recorded in at least two different accounts, with equal and opposite debit and credit entries
Double-entry accounting
Recorded $9,800 of fees earned on account.
Dr accounts receivable / Cr Fees Earned 9,800
What is the balance in the accounts receivable account if the beginning balance was 6,000. Your customer paid back 3,000 and purchased services on account for 4,000. (indicate the amount and dr or cr)
6,000-3,000+4,000 = 7,000 DR
The Normal Balance of Cost of Goods Sold
Expenses - Debit
An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.
Slide Error
The process of recording a transaction in the journal.
Journalizing
Quasi Company purchased a building and a plot of land for $750,000. The building was valued at $500,000 while the land carried a value of $250,000. Nickle paid $300,000 down in cash and signed a note payable for the balance.
Dr Building 500,000 Dr Land 250,000
Cr Cash 300,000 Cr Notes Payable 450,000
What is the end balance in Prepaid Insurance if the following happened this month. Your purchased a 6 month policy for $6,000. You adjusted the balance because one month of the policy expired. (indicate the amount and dr or cr)
$5,000 DR
The Normal Balance of Accumulated Depreciation
Credit
An error in which the order of the digits is changed, such as writing $542 as $452 or $524.
Transposition Error