Accounting 1
what is land considered?
asset
when supplies are purchased with cash, what will happen to the cash account?
A note payable is this type of account
Liability
Business expenses are recorded in which financial statements
Income statement
name a current asset
What are :
cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets
What happens to the two accounts when you buy office equipment with cash?-DRAW IT
cash account decreases (credit), office equipment increases (debit)
what is owners equity
the owner's investments to the business
Accounting entries involve a minimum of how many accounts?
two
what happens to the cash account when you sell a product and receive cash from your customer?
the cash account increases
Further introduction of capital will_____________the capital account
Increase
the amount of money in an account is called the
account balance
Joe Inc. pays a $400 gas bill...how will this be entered ?
Utility Expense : Debit (increase 400)
when cash is received, the cash account will change in what way
the cash account will increase
This is the accounting equation
Assets = Liabilities + Owners Equity
When you sell your company vehicle and receive cash, what happens to the asset account?
The asset account remains the same
When you pay for insurance in advance, this account will be debited
Pre-paid insurance
Bonus : What type of account is this?
When a business earns money via service or sales, what is this called ?
Revenue
We purchase $400 supplies on account, draw the t-accounts....
Debit : supplies 400
Credit : account payable 400
Money withdrawn from the business by a sole proprietor taken for personal use is called as
Drawings
what is the main purpose of accounting?
to make financial statements
When a business owner receives a loan from the bank, what will happen to his cash account?
The cash account will increase
This is payment made to employees for their duties
What are wages and salary
What is a business with only one owner?
Sole proprietorship
Where will you record patent in statement of financial position (what type of account)
Assets side
which account type are Accounts Receivable?
Asset