Financial Accounting 101 Flashcards
1
Q
What is the accounting equation?
A
The stuff your business owns needs to equal the stuff your business owes. In other words, your assets need to match liabilities plus equity.
2
Q
What is an unadjusted trial balance for?
A
To ensure your debits equal your credits (to ensure the accounting equation is true)
3
Q
What kind of trial balance follows the accrued method of accounting?
A
An adjusted trail balance
4
Q
What are the three main financial statements?
A
Balance sheet, income statement, cash flow statement
5
Q
What 8 steps make up the accounting cycle?
A
Step 1: identify transactions Step 2: prepare journal entries Step 3: post to general ledger Step 4: unadjusted trial balance Step 5: post adjusting entries Step 6: adjusted trial balance Step 7: create financial statements Step 8: post closing entries
