Accounting 4-5

Question 1

Ledger

Answer 1

A group of accounts

Question 2

Account

Answer 2

A record that documents each change to items in the accounting equation

Question 3

Double Entry System of Accounting

Answer 3

An system of accounting where transactions are recorded in 2 steps, first debits then credits so that the entries equal the same.

Question 4

Exceptional Balances

Answer 4

when the typical balance in an account is opposite to what it should be

Question 5

Purchased on account

Answer 5

An item is purchased but not paid for yet

Question 6

Sold on account

Answer 6

An Item is sold on credit, not paid for yet

Question 7

Payment on account

Answer 7

money is paid to reduce the owed amount

Question 8

Received on account

Answer 8

money is received to reduced the amount owed

Question 9

Steps to taking off a trial balance

Answer 9

1. Headings
2. list acccounts + values
3. Put debits and credits in designated areas
4. Add up columns
5. make sure they balance

Question 10

Taking a trial balance on an adding machine1

Answer 10

1. clear calculator
2. input equations as appeared in ledger, debits has positive value, credits have negative.
3. balance should equal 0

Question 11

How to find an error on a trial balance (4 steps)

Answer 11

1. re-add the column
2. check if accounts are missing, misplaced, or misvalued
3. recalculate the account balances
4. check for balancing in each transaction

Question 12

Revenue

Answer 12

Money made from running a business
-Credit balance

Question 13

Drawings

Answer 13

Money taken out of the business by the owner
-Debit balance

Question 14

Expenses

Answer 14

Money used to run the business to make money
-Debit balance

Question 15

Why expand the ledger?

Answer 15

-To gain more insight about the progress of a business.
-Helps owners make decisions
-To put more concise information on a balance sheet

Question 16

Revenue recognition principle

Answer 16

requires revenue to be recorded in the accounts at the time the transaction was completed.

Question 17

Time Period concept

Answer 17

An accounting standard that states that the accounting will take place over a certain time period

Question 18

The matching principle

Answer 18

Expenses that helped make the revenue must be in the same period.

Question 19

Fiscal Period

Answer 19

A period of time over which earnings are measured.
-usually 12 months
-aka financial/accounting period.

Question 20

chart of accounts

Answer 20

100=assets
200=liabilities
300=equities
400=revenue
500=expenses

Question 21

Equity equation (net gain)

Answer 21

Beginning capital + Net income - drawings = ending capital

Question 22

Equity Equation (net loss)

Answer 22

Beginning capital - net income - drawings = ending capital