Debits & Credits
This side of a balance sheet increases assets
What is the debit side?
Buying inventory for cash requires a debit to Inventory, then a credit to this account
What is Cash?
Revenue minus expenses equals this
What is net income?
Goods a company buys to resell
What is merchandise inventory?
The money owed by customers
What is Accounts Receivable?
Accounts Payable, Revenue, and Common Stock all have this normal balance
What is a credit balance?
Selling merchandise on account requires a debit to this account
What is Accounts Receivable?
Cost of Goods Sold appears on this statement
What is the income statement?
This expense represents the cost of inventory that was sold
What is Cost of Goods Sold (COGS)
An amount owed to suppliers
What is Accounts Payable?
A company pays rent in cash. Rent Expense is recorded on this side.
What is debit?
When inventory is sold, this account must also be debited
What is Cost of Goods Sold (COGS)?
Inventory is classified as this type of asset
What is a current asset?
The seller is responsible for shipping costs until they are delivered to the buyer
What is FOB Destination?
Expenses that have been incurred but not yet paid are this
What are accrued expenses?
Loans increase on this side of the account
What is credit?
Returning defective inventory to a supplier reduces this account
What is Inventory?
This statement is prepared first in the accounting cycle
What is the income statement?
Inventory is reported on this financial statement
What is the balance sheet
Cash received before a service is performed is recorded as this
What is unearned revenue?
This type of account increases with credits and decreases with debits
What is a Liability/Equity
A sale on account requires this many journal entries under a perpetual system
What system needs two journal entries?
Net income flows from the income statement to this statement
What is the statement of retained earnings?
Under a perpetual system, inventory is updated at this time
What is every purchase and sale
The decrease of an asset’s cost over its useful life
What is depreciation?