FINAL

Question 1

What does the term “Realization of Revenue” mean?

Answer 1

Realization of revenue means that you recognize a sale and the corresponding revenue at the moment of the sale, not at the time you actually receive the cash for the sale.

Question 2

Is cash normal debit or credit?

Answer 2

Debit

Question 3

Is petty cash normal debit or credit?

Answer 3

Debit

Question 4

Is accounts receiveable normal debit or credit bakance?

Answer 4

Debit

Question 5

Is supplies a normal debit ir credit?

Answer 5

Debit

Question 6

Is prepaid insurance normal debit or credit

Answer 6

Debit

Question 7

Is drawing normal debit ir credit?

Answer 7

Debit

Question 8

Are expense accounts normal debit or credit?

Answer 8

Debit

Question 9

Is sales discount a normal debit or credit?

Answer 9

Debit (opposite of sales)

Question 10

Is sales resturns and allowances normal debit or credit?

Answer 10

Debit (works opposite if sales)

Question 11

Are purchases normal debit or credit?

Answer 11

Debit

Question 12

Is cash short and over normal debit or credit?

Answer 12

Debit

Question 13

Is sales a normal debit or credit?

Answer 13

Credit

Question 14

Is capital a normal debit or credit?

Answer 14

Credit

Question 15

Is accounts payable a normal debit or credit?

Answer 15

Credit

Question 16

Is sales tax payable a normal debit or credit?

Answer 16

Credit

Question 17

Is purchases discount a normal debit or credit?

Answer 17

Credit (works opposite of purchases)

Question 18

Is purchases returnns and allowsnces a normal debit or credit?

Answer 18

Credit (works opposite of purchases)

Question 19

What is the order of the accounting cycle?

Answer 19

1. Analyze transactions
2. Journalize transactions
3. Post individual lines to ledger
4. Post column totals to ledger
5. Complete Worksheet
6. Complete income statement/balance sheet
7. Journalize adjusting entrues
8. Post adjusting entries
9. Journalize closing entries
10. Post closing entries
11. Complete post-closing trial balance

Question 20

How to establish petty cash?

Answer 20

Go to journal. Put the title “petty cash” in the column title. Then debit petty cash however much you wish to put in the petty cash account. Also, credit cash (so debits and credits balance).

Question 21

How to replenish petty cash?

Answer 21

Post all expenses/bills that were paid for with the petty in one transaction (with multiple lines). Debit the expenses and journalize the sum total of the expenses as a lump sum cash credit.

Question 22

What does the term “Going Concern” mean?

Answer 22

Going concern means that the finances/accounting of a business is handled as if the business with keep operating indefinitely.

Question 23

What is the order of closing entries?

Answer 23

Sales——> Income Summary
Expenses——>Income Summary
Income Summary——> Capital
Drawing——>Capital

Question 24

What accounts are temporary accounts?

Answer 24

Revenue (Sales)
Expenses
Drawing
Income Summary

Question 25

What accounts are permenant?

Answer 25

All others besides the aforementioned.

Question 26

How do you reconcile a bank statement?

Answer 26

In the left column:

• -write the check stub balance up top.
• -write in bank charge(s) and their amounts in the box titled “deduct bank charges”
• -subtract the sum of the bank charges from the check stub balance in order to get your adjusted check stub balance

Right Side:

• -write the balance from the bank statement up top.
• -write the date and amount of any outstanding deposits and total them.
• -add the outstanding deposits to the bank statement balance to get the subtotal.
• -write the check no. and amount of outstanding checks
• -take the total of outstanding checks and subtract it from subtotal to get your adjusted bank balance.

In the end, your adjusted bank balance should equal adj. check stub bakance

Question 27

How do you do an income statement:

1. Put the company title on the top line, the words “Income Statement” on the middle line, and the words “for the month ended (Month) 20–”
2. In the title row, write the word “revenue”
3. Indent and list individual revenue accounts (usually just sales); write the total in the credit column (due to the normal credit balance of revenue accounts)
4. After listing the revenue accounts, write the title “expenses” in the account title.
5. Indent and write the individual titles of every expense account ( and their DEBIT BALANCES).
6. After the last revenue account title, write the title “Total Expenses” and write the total dollar amount below the revenue dollar amount in the credit column.
7. Subtract total expenses from the total revenue amount to obtain your net income.
8. Below the title “Total Expenses,” write the title “Net Income” and write the income amount in the credit column.

• Don’t forget to single rule the totals of TOTAL REVENUE and TOTAL EXPENSES*
• Double rule both the debit and credit columns under the “net income total*
• Don’t Forget to label each expense of revenue account with the percentage of the sales that it is.*

Answer 27

1