Chapter 5 Flashcards
Adjustments to journal entries are made at any time or at the end of the accounting period?
End of accounting period
The trial balance section of your worksheet include what columns from the General Journal?
Debit and Credit columns
When you make an error in the General Journal, what steps do you take to correct it?
An adjusting entry includes the name of account that was wrongly given the money, the date the adjustment is made, and shows how the money moves from the wrong account to the right account.
A prepaid asset will get smaller when?
It is used. Prepaid rent that is used will be SUBTRACTED from the ASSET- Prepaid Rent and ADDED to the EXPENSE-RENT
An expense increases, as a debit to the account, when what happens?
The money is spent on that expense.
What is the process of allocating the cost of long-term assets over their expected useful lives?
Depreciation
Cost MINUS Salvage Value (value at the end of the use of a large asset) DIVIDED by the Estimated Useful Life is called…
Straight-line Depreciation
What is a contra account?
An account with a normal balance that is the opposite of a related account.
An asset will lose value, or depreciate, throughout its lifetime of use. When you SUBTRACT the depreciation amount from the purchase price, what do you have?
Book value. Final value of the asset.
What is the difference between a Trial Balance and an Adjusted Trial Balance
Errors made during the accounting period are corrected, accounts are adjusted and final balances are made.
What do you call it when a firm loses money in an accounting period?
Net Loss
True or False:
When creating a balance sheet, assets are listed first, liabilities and owners equity, then Revenue or Fees Income. Expenses are last.
True
Revenue or fees income and expenses are on what statement?
Income Statement
What statement includes Capital, Net Income, and Increase or Decrease in Capital?
Statement of Owner’s Equity
A balance sheet includes Assets, Liability’s and what?
Owner’s equity
