Three’s Company
What are the three principal financial statements for a corporation?
Income Statement, Statement of S/E, Balance Sheet
What are transactions that have not yet been recorded in the accounts?
accruals
What is the adjustment for supplies?
Dr Supplies Expense; CR Supplies
What is horizontal analysis and what form is it usually used on?
Comparing from one year to the next (usually balance sheet)
What is the only temporary account in the S/E section?
dividends
Name three advantages of the corporation form of ownership
Limited liability, more capital funds available, ease of ownership transfer
Accounting records can be kept on what two methods?
cash and accrual
(sometimes also recorded using the tax basis)
What is the adjustment for insurance?
DR Insurance Expense; CR Prepaid Insurance
What is vertical analysis and what form is it usually used on?
Comparing individual items as a percentage of a total (usually as a % of net sales, income statement)
What are three types of assets?
Current, long-term, Other, and Investments
Name three disadvantages of the corporation form of ownership.
Double taxation, government regulation, complicated/expensive to organize
What CPA do accruals and deferrals satisfy?
CPA: Concepts, Principles & Assumptions
Matching principle
What is the adjustment for deadbeat customers?
DR Bad Debt Expense; CR AUA
What are the three financial statements for a corporation?
Income Statement, Statement of S/H Equity, and Balance Sheet
Corporate income tax?
C-FIT expense
Name three stockholders’ equity accounts.
Common Stock, Preferred stock, Retained Earnings, PICEPAR
When are reversing entries dated?
On the first day of the subsequent fiscal period
What is the adjustment for equipment costs?
DR Depreciation Exp; CR Accum. Depr.
How do you correct unacceptable percentages for expenses?
Use a budget and track expenses better
(stop having a skill issue)
How is interest income classified?
other revenue
What are the three types of entries done at the end of a fiscal period?
adjusting, closing, reversing
How are reversing entries determined?
They are the opposite of adjusting entries
What is the adjustment for additional C-FIT owed?
DR C-FIT Expense; CR C-FIT Payable
What is the source of information for the financial statements?
the worksheet
Cash spent, assets consumed, or liabilities incurred to earn revenue for the business?
operating expenses