Accy Midterm

Question 1

Name of org that writes US GAAP

Answer 1

FASB or financial accounting standards board

Question 2

Accounting equation

Answer 2

assists = liabilities + stockholders’ equity

Question 3

Assets

Answer 3

resources owned by the company -> cash, inventory, receivables, pre paid expenses

Question 4

Liabilities

Answer 4

obligations or debts owed to others -> accounts payable, notes payable, deferred revenue

Question 5

stockholder’s equity

Answer 5

owner’s claim on the assets after liabilities are paid -> common stock, preferred stock, retained earnings, additional paid in capital

Question 6

debits

Answer 6

entry made on the left side of an account

Question 7

credits

Answer 7

an entry made on the right of an account

Question 8

assets, debits and credits

Answer 8

debits: increase assets
credits: decrease assets

Question 9

liabilities, debits and credits

Answer 9

debits: decrease liabilities
credits: increase liabilities

Question 10

credits and debits stockholders’ equity

Answer 10

debits: decrease SE
credits: increaser SE

Question 11

what does revenue affect?

Answer 11

increase net income and stockholder’s equity

Question 12

Income statement

Answer 12

revenue - expenses = net income

pretax income - (pretax income x tax rate) = net income

summary of business’s revenues and expenses over a period of time

Question 13

statement of stockholders’ equity

Answer 13

retained earnings, decreased by dividends and increased by net income

-explains the change from one balance sheet to another

Question 14

statement of cash flow

Answer 14

operating (current A + L), financing (equity), investing (concurrent A + L)

-amount of money coming in and out

Question 15

Order of steps

Answer 15

income statement, balance sheet, cash flow statement

Question 16

Trial balance

Answer 16

accounting report showing the closing balances in all general ledger accounts at a point in time

Question 17

DEALER trick

Answer 17

Dividends + Expenses + Assets = Liabilities + owner’s Equity + Revenue

Question 18

accrued revenue

Answer 18

revenues earned but not yet recorded

Question 19

accrued expenses

Answer 19

expenses incurred but not yet recorded

Question 20

deferred revenue

Answer 20

cash received before services are performed

Question 21

prepaid expense

Answer 21

payments made in advance for expenses

Question 22

unadjusted trial balance

Answer 22

prepared before adjusting entries are made. shows the balance before any end-of-period adjustment

Question 23

adjusted trial balance

Answer 23

prepared after adjusting entries are made. ensures that all accounts are updated for financial statement preparation

Question 24

Sales (revenue) entries

Answer 24

debit: accounts receivable (or cash)
credit: sales revenue

Question 25

Purchases (expenses)

Answer 25

debit: expense account (supplies, rent)
credit: accounts payable (or cash)

Question 26

Cash receipts (receiving cash for services/products)

Answer 26

debit: cash
credit: accounts receivable (or sales revenue)

Question 27

Cash payments (paying expenses or creditors)

Answer 27

debit: accounts payable (or expenses)
credit: cash

Question 28

inventory purchases

Answer 28

debit: inventory
credit: accounts payable (or cash)

Question 29

inventory sold

Answer 29

debit: cost of goods sold
credit: inventory

Question 30

accrued revenue

Answer 30

debit: accounts receivable
credit: revenue

Question 31

accrued expenses

Answer 31

debit: expense
credit: liability (wages payable)

Question 32

prepaid expenses

Answer 32

debit: expense
credit: prepaid assest

Question 33

unearned revenue

Answer 33

debit: unearned revenue (liability)
credit: revenue

Question 34

components of income statement

Answer 34

revenue (service revenue) and total expenses (cost of good sold, salary expense, utility expense, rent expense, interest expense, supply expense, depreciation expense, income tax expense) then solve for net income

Question 35

components of statement of retained earnings

Answer 35

beginning balance, net income, dividends, and ending balance

ending retained earnings = beginning retained earnings + net income - dividends

Question 36

components of balance sheet

Answer 36

assests (cash, accounts receivable, inventory, prepaid rent, supplies, equipment, accumulated depreciation, land)-> total assets and total liability and stockholder’s equity (accounts payable, salary payable, interest payable, unearned revenue, long-term debt, common stock, retained earnings)

retained earnings: refer to the ending balance on the statement of retained earnings just made