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Accounting Review

TermDefinition
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