Ch 3 Flashcards

Question

Internal events, 2 examples, define?

Answer 1

Occur within an entity Ex 1using buildings and machinery in operations Ex 2 transferring or consuming raw materials in production process

Answer 2

Company records as many events as possible that | Affect its financial position

Answer 3

Chronologically lists transactions or other events | Expressed in terms of debits or credits

Answer 4

1 Accounts and amounts to be debited 2 accounts and amounts to be credited 3 date 4 explanation

Answer 5

Summarize transactions processing a common characteristic (cash receipts, sales, purchases, cash payments) Reduce bookkeeping time

Answer 6

1 in ledger enter date, journal page and amount shown in journal for debit 2 in reference column of journal write account # to which Debit amount was posted 3 in ledger enter date, journal page and amount shown in journal for credit 4 in reference column of journal write account # to which Credit amount was posted

Answer 7

Has 3 money columns debit, credit and balance

Answer 8

1 indicates ledger account number involved 2 indicates completion of posting for particular item

Answer 9

1 identify the type of account involved 2 determine whether a debit or credit is required

Answer 10

1 list account titles and balances to appropriate debit Or credit column 2 total the debit and credit columns 3 prove equality of 2 columns

Answer 11

1 Some events aren't recorded daily b/c its not efficient Ex. Use of supplies, earnings by employees 2 some costs are not recorded during accounting period B/c these costs expire with the passage of time Ex. Depreciation, rent, insurance 3 some items may be unrecorded Ex. Utility service bill that won't be received til next Accounting period

Answer 12

Deferrals and accruals

Answer 13

Prepaid expenses: expenses paid in cash before used or consumed Unearned revenues: cash received before services are Performed

Answer 14

Accrued revenues: revenues for services performed but not Yet received in cash or recorded Accrued expenses: expenses incurred but not yet paid in Cash or recorded

Answer 15

Expenses or revenues that are recognized at a date | Later than the point when cash was originally exchanged

Answer 16

The asset or liability is overstated

Answer 17

Debit to the expense account and credit to asset account

Answer 18

How long asset is expected to be productive

Answer 19

Process of allocating the cost of an asset to Expense over its useful life in a systematic manner Estimate of expired cost

Answer 20

Offsets an asset account on a balance sheet as a credit | Account

Answer 21

Difference between assets cost and it's accumulated | Depreciation

Answer 22

Not a valuation concept, so doesn't report fair value Allocates an asset's cost to periods which it is used Depreciation does not attempt to report actual change In the value of the asset

Answer 23

Unearned revenue is a credited liability account During adjustments unearned revenue is debited And the revenue account is credited

Answer 24

Increase the balance sheet and income statement accounts

Answer 25

Debit increase to assets and credit increase to revenue | accounts

Answer 26

Uncollectible accounts are recorded as bad debt expense

Answer 27

Contra asset account of estimated uncollectible accounts

Answer 28

Account used to close revenues and expenses into | Retained earnings

Answer 29

Reverse affects of adjustment entry made at | Beginning of next accounting period

Answer 30

``` 1 identify and measure transactions 2 journalizing 3 posting 4 preparing unadjusted trial balance 5 make adjustment entries 6 prepare adjusted trail balance 7 prepare financial statements 8 closing entries ```

Answer 31

Merchandiser must account for gross profit from sales