Vocabulary
The annual accounting period adopted by a business.
FISCAL YEAR
What is the book value of the Delivery truck given the following info from the General Ledger
Truck 55,000 dr / Depreciation Expense 5,000 dr / Accumulated Depreciation Truck 15,000 cr / Notes Payable - Truck 25,000cr
Book Value = $40,000
There are two closing entries. The first one is to close _____; the second one is to close _____.
revenues and expenses, the drawing account
Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a(n)
ASSET
Who is the father of accounting?
Luca Pacioli
The ability to convert assets into cash.
LIQUIDITY
Unearned fees appear on which financial statement and what section of that financial statement
Statement - balance sheet
Section - current liability
Give 2 examples of Permanent (Real) Accounts
Any Asset, Liability or the capital account.
The adjusting entry for gym memberships earned that were previously recorded in the unearned gym memberships account is
debit Unearned Gym Memberships
credit Gym Memberships Revenue
The company feature in our book is NetSolutions. Who is the owner of this company?
Who is Chris Clark?
Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations that depreciated over time.
Fixed Assets (or Plant Assets)
The first item appearing on the statement of owner's equity is
the beginning balance of owner's equity
Which of the following accounts should be closed to the capital account at the end of the year?
Service Revenue
Equipment
Prepaid Insurance
Unearned Rent
Service Revenue
Which of the following is an example of a prepaid expense?
Supplies, Accounts Receivable, Unearned Subscription Revenue, Unearned Fees
SUPPLIES
Name the "Big 4" accounting firms
PWC, Deloitte, E & Y, KPMG
A customer's written promise to pay an amount and possibly interest at an agreed-upon rate.
Notes Receivable
In relation to the balance sheet and income statement the statement of owner’s equity should be prepared
After the income statement and before the balance sheet.
The post-closing trial balance differs from the adjusted trial balance in that it does not
include income statement accounts
(also known as temporary or nominal accounts)
The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, what is the adjusting entry required?
DR Unearned Rent $54,000
CR Rent Revenue $54,000
(Amount of Adjusting Entry = Beginning Balance – Ending Balance = $72,000 – $18,000 = $54,000)
What is your ending capital balance if...
Beg. Bal $186,000, Net Income is 18,750
Investments are 40,000, Cash balance is 75,000
Withdrawals are 25,000
What is 219,750?
186,000 + 40,000 + 18,750 - 25,000
A fiscal year that ends when business activities have reached the lowest point in an annual operating cycle.
Natural Business Year
After posting the first closing entry to the owner's capital account, the balance will be increased (decreased) by
the net income (net loss) for the period
For a corporation...instead of closing the nominal accounts to capital they close the accounts to what permanent account
Retained Earnings
The adjusting entry for Prepaid insurance in the amount of 2,000 was not done. What effect does this have on owners equity?
OWNER'S EQUITY IS OVERSTATED
rationalization....
R-E = NI (Expense not journalized) NI over
A=L=OE (Assets too high, credit to PPI not done, therefore OE too high)
What company created FARMVILLE2 which was the feature company in this chapter.
Zynga