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Accounting Review
| Term | Definition |
|---|---|
| Entries used to zero-out and prepare accounts for the new fiscal period | Closing Entries |
| Name 2 Financial Statements | Income Statement and Balance Sheet |
| Accounting Equation | A=L+OE |
| What is Equity? | The owner's financial claim to the business |
| Which of the following are increased through debits? AP, AR, Capital, Cash, Drawing, Expenses, Prepaid Insurance, Sales, Supplies | AR, Cash, Drawing, Expenses, PI, Supplies |
| Which of the following are increased through credits? AP, AR, Capital, Cash, Drawing, Expenses, Prepaid Insurance, Sales, Supplies | AP, Capital, Sales |
| A positive entry on the left side of the accounting equation | Debit |
| Bought supplies on account | D-Supplies; C-AP |
| What are the 4 closing entries? | Sales->IS; Expenses->IS; IS->Capital; Drawing->Capital |
| Items of value the business possesses and used to operate the business | Asset |
| What is the difference between AR and AP? | AR is money owed to us that we are waiting to receive and AP is money we owe that we are waiting to pay |
| Where transaction information for each specific account is recorded | General Ledger |
| Money earned/coming into a business that increases OE | Revenue |
| Drawing and Income Summary get closed out into what account? | Capital |
| Purchased merchandise with cash | D-Purchases; C-Cash |
| What effect do the following accounts have on OE? Capital, Drawing, Sales, Expenses | Capital and Sales increase OE; Drawing and Expenses decrease OE |
| Money a business is waiting to pay someone else | Accounts Payable |
| A journal used to record only transactions that involve buying merchandise on account | Purchases Journal |
| Give 2 examples of asset accounts | Cash, Petty Cash, Supplies, AR, Prepaid Insurance, Equipment, Inventory… |
| What is the difference between an Income Statement and a Balance Sheet? | Income statement shows how revenue and expenses and shows how much profit a business made. Balance sheet lists out A, L and OE and shows a company's financial position at a given point in time |
| Money a business is waiting to receive from someone else | Accounts Receivable |
| What is an Asset? | An item of value that the company uses to run the business |
| Recorded a company’s payroll taxes expense | D-Payroll Tax Expense; C-Payables |
| What is a Credit? | An entry that positively affects the right side of the accounting equation (liabilities and equity) |
| An all purpose accounting form used to record transactions in a chronological order | General Journal |
| Give 2 examples of liability accounts | AP, Sales Tax Pay, Unemployment Tax Pay, Employee Income Tax Pay, FICA Pay |
| What do the terms Journalize and Post mean? | Journalize is listing out each transaction and Posting is putting the amounts into the specific accounts affected |
| Give 3 examples of employee payroll deductions | State Inc Tax, Fed Inc Tax, SS, Medicare, Health Insurance, Dues, United Way, Retirement… |
| A document containing information about a transaction that serves as proof that the event occurred and can be recorded | Source Document |
| Received cash from owner as an investment in the company | D-Cash; C-Capital |
| When Journalizing a transaction, what is the minimum number of accounts that will be affected? Will they be debits or credits? | 2; one D and one C |
| A listing of GL accounts proving that Dr = Cr | Trial Balance |
| A financial statement showing how much money a company made/loss (Revenue and Expenses) | Income Statement |
| Recorded payroll | D-Salaries Exp; C-Payables(deductions) and Cash |
| Signing the back of a check before cashing/depositing to officially transfer ownership | Endorsemnt |
| The negative result of Revenue – Expenses | Net Loss |
| A financial statement showing financial position at a given point in time (A, L OE) | Balance Sheet |
| Received cash from sales | D-Cash; C-Sales |
| How do you calculate a company’s profit/loss? | Revenue-Expenses |
| Paid cash to owner for personal use | D-Drawing; C-Cash |
| Purchased merchandise on account | D-Purchases; C-AP |
| Paid cash on account | D-AP; C-Cash |
| What is a Liability? | Money owed to others |
| An accounting form used to summarize GL information in preparation for month end activities | Worksheet |
| What is a Debit? | An entry that positively affects the left side of the accounting equation (assets) |
| Give 2 examples of equity accounts | Capital, Drawing |
| Paid employee deductions and employer payroll taxes to the government | D-Payables; C-Cash |
| Sold services on account | D-AR; C-Sales |
| A journal used to record only transactions that involve the receipt of cash | Cash Receipts Journal |
| A positive entry on the right side of the accounting equation | Credit |
| A journal used to record only transactions that involve the payment of cash | Cash Payments Journal |
| All sales and expenses get closed out into what account? | IS |
| Received cash on account | D-Cash; C-AR |
| The owner’s financial stake in the business | Owner's Equity |
| Give 3 examples of a company’s payroll expenses | State Unemployment, Fed Unemployment, SS, Medicare |
| Transferring information from the GJ to the GL | Posting |
| Paid cash for rent | D-Rent Expense; C-Cash |
| The positive result of Revenue – Expenses | Net Income(Profit) |
| The arbitrary length of time (year) that a business summarizes and reports financial information | Fiscal Period |
| Entries used to update GL accounts at the end of the fiscal period | Adjusting Entries |
| Why do you close IS into Capital? | To give the owners' their share of the profit |
| Activities involving planning, recording, analyzing and interpreting financial information | Accounting |
| A journal used to record only transactions that involve the sale of merchandise on account | Sales Journal |
| Owner withdrew merchandise | D-Drawing; C-Merchandise |
| An amount of cash kept on hand to make small payments | Petty Cash |
| Money owed to others | Liability |
| Money spent/leaving the business that decreases OE | Expenses |
Created by:
damato
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