MD#6 : Review of Journal Entries, T-Accounts, and Trial Balance (1st Grading Period)

Question 1

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.

Answer 1

Accounting Standards Council (ASC)

Question 2

Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof.

Answer 2

The American Institute of Certified Public Accountants defines accounting (AICPA)

Question 3

Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information.

Accounting is a process of identifying, recording and communicating economic information that is useful in making economic decisions.

Answer 3

American Accounting Association (AAA)

Question 4

The 5 Major Accounts

Answer 4

1. Asset
2. Liability
3. Owner’s Equity
4. Revenue
5. Expense

Question 5

The Accounting Equation

Answer 5

Assets = Liability + Equity

Question 6

The Expanded Accounting Equation

Answer 6

Assets = Liability + Equity + Revenue - Expenses

Question 7

The Accounting Cycle

Answer 7

1. Journalize Transactions
2. Post to Ledger Accounts
3. Prepare a Trial Balance
4. Journalize and Post Adjusting Entries
5. Prepare an Adjusted Trial Balance
6. Prepare Financial Statements
7. Journalize & Post Closing Entries
8. Prepare a Post Closing Trial Balance
9. Analyze Business Transactions
10. REPEAT