financial statements

Question 1

what must be present for an event to be recorded in the accounting system

Answer 1

it must impact financial statement, be an economic event, and should be a faithful representation of event

Question 2

what falls under the shareholder’s equity portion of the accounting equation

Answer 2

shareholder’s capital and retained earnings

Question 3

what falls under the retained earnings section

Answer 3

beginning retained earnings
revenues- expenses
dividends declared

Question 4

double entry accounting

Answer 4

describes the system used by companies to record the effects of transactions on the accounting equation

Question 5

normal balance of share capital and retained earnings, and revenue

Answer 5

the normal balance falls under credit.

A decrease in either falls under debit and an increase in either falls under credit

Question 6

normal balance of assets

Answer 6

normal balance falls under debit

A decrease in assets falls under credit and an increase in assets falls under debit

Question 7

normal balance of liabilities

Answer 7

normal balance falls under credit

A decrease in liabilities falls under debit and an increase in liabilities falls under credit

Question 8

normal balance of expenses and dividends declared

Answer 8

normal balance falls under debit

an increase in either falls under debit and a decrease in either falls under credit

Question 9

when do you apply the t-chart

Answer 9

for journal entries

Question 10

general ledger

Answer 10

used to collect all individual financial statements.

The info from the journal entries are transferred to general ledger through a process called posting

Question 11

trial balance

Answer 11

list of all active accounts and each account’s debt or credit balance

does not detect errors of analysis only prove the equality of debits and credits