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Vocabulary I
Formulas
Vocabulary II
Problems I
Problems II
100
An entry made at the end of the accounting period that is used to record revenues to the period in which they are earned and expenses to the period in which they occur.
What is an adjusting entry?
100
Cost - Accumulated depreciation
What is book value?
100
Accounting method that records revenues when earned and expenses when incurred.
What is accrual basis accounting?
100
Prepaid rent expired, $1,000
Debit - Rent Expense, $1,000 Credit - Prepaid Rent, $1,000
100
Supplies used, $400
Debit - Supplies Expense, $400 Credit - Office Supplies, $400
200
An expense that the business has incurred but has not yet paid.
What is accrued expense?
200
7/12
What is 7 months as a fraction?
200
A revenue that has been earned but for which the cash has not yet been collected.
What is accrued revenue?
200
Accrued service revenue, $800
Debit - Accounts Receivable, $800 Credit - Service Revenue, $800
200
Accrued salaries expense, $1,200
Debit - Salaries Expense, $1,200 Credit - Salaries Payable, $1,200
300
Guides accounting for expenses, ensures that all expenses are recorded when they are incurred during the period, and matches those expenses against the revenues of the period.
What is the matching principle?
300
Week of salary / 5 working days
What is the formula to calculate a day of salaries?
300
An account that is paired with, and is listed immediately after, its related account in the chart of accounts and associated financial statement and whose normal balance is the opposite of the normal balance of the related account.
What is a contra account?
300
On January 1st, 2015, I bought land worth $35,000. It will be used for 35 years. Calculate the 1st year of depreciation.
Land doesn't depreciate!
300
Service revenue that was collected in advance, $200, has now been earned.
Debit - Unearned Revenue, $200 Credit - Service Revenue, $200
400
Assumes that a business's activities can be sliced into small time segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year.
What is the time period concept?
400
(Cost - Residual value) / Useful life in years
What is the formula for straight line depreciation?
400
The process by which businesses spread the allocation of a plant asset's cost over its useful life.
What is depreciation?
400
Paid salaries, $1,200, utilities, $650, and rent, $2,400. List debits/credits from greatest to least, with debits first.
Debit - Rent Expense, $2,400 Debit - Salaries Expense, $1,200 Debit - Utilities Expense, $650 Credit - Cash, $ 4,250
400
Accrued interest on note, $100
Debit - Interest Expense, $100 Credit - Interest Payable, $100
500
Requires companies to record revenue when it has been earned and determines the amount of revenue to record.
What is the revenue recognition principle?
500
[(Cost - Residual value)/Useful life in years] * 5/12
What is the straight line depreciation formula for 5 months?
500
Long-lived, tangible asset, such as land, buildings, and equipment, used in the operation of a business.
What is a plant asset?
500
On January 1st, 2015, I bought a boat for $37,500. It has a useful life of 7 years, and a residual value of $2,500. Calculate the depreciation as of December 31st, 2015.
Debit - Depreciation Expense, $5,000 Credit - Accumulated Depreciation, $5,000
500
On January 1st, 2015, I bought a boat for $37,500. It has a useful life of 7 years, and a residual value of $2,500. Calculate the accumulated depreciation as of May 31st, 2016.
Accumulated Depreciation = $7,083.33