Chapter 4 and 5 Flashcards
chart of accounts
a list of all accounts
how do we number accounts in the chart of account?
- Assets
- Liabilities
- Owner’s Equity
- Revenue
- Expenses
Double entry accounting
each transaction affects at least two accounts
debit is on the _____, credit is on the ______.
left, right.
Asset
------------
|
|
|Asset
------------
\+ | -
|
|Liability
------------
|
|
|Liability
------------
- | +
|
|Owner's
Equity
------------
|
|
|Owner's
Equity
------------
(-) | +
|
| investment
(-) = owners capital
Owners
Withdrawals
------------
|
|
|Owners
Withdrawals
------------
\+ |
|
|Expenses
------------
|
|
|Expenses
------------
\+ |
|
|Revenue
------------
|
|
|Revenue
------------
| +
|
|where are normal balances found?
on the increase side of an account
revenue (fees earned)
increases in OE as a result of selling goods or providing service (only a credit)
expenses
every time you pay a cost of operating a business the expenses go up (accumulates) so if you pay rent
Rent. Exp. Cash
———- ——-
+| |-
| |
owner drawing
treated like an expense- only a debit accumulates
Owner D. Cash
———- ——-
+| |-
| |
temporary capital accounts
revenue, expense, and withdrawals accounts are used to collect information for a single accounting period
permanent accounts
continuous from one accounting period to the next
name the three basic parts to a T account
classification, account, debit/credit
what are the six steps involved in analyzing a business transaction?
- identify accounts affected
- classify accounts affected
- determine account of increase or decrease for each account affected
- which account is debited? for what amount?
- which account is credited? for what amount?
- what is the complete entry in T-accounts forms?
account
shows the specific balance for any item
new accounting equation
A = L + OC + R - OwD - E
how do you set up a trial balance?
Trial Balance
Date
what are the two accounts affected ?
paid Floral Fixtures a portion of the amount owed for furniture purchased earlier in the month, $2,500
A/P, name - debit, $2,500
Cash - credit, $2,500
which accounts are affected?
you received $350 for the service provided in transaction #8
cash - debit, $350
A/R - credit, $350
what the acronym for T - accounts?
ALOeOdER
what’s the acronym for chart accounts ?
ALORE
T is the letter…
T
