Midterm Review Flashcards
Owner received an advance payment for services
Debit cash; Credit unearned fees
Received cash from clients on account
Debit cash; Credit A/R - Client
Paid cash for a newspaper advertisement
Debit advertising expense; Credit cash
Paid ABC Co for part of the debt incurred earlier
Debit A/P - ABC Co: Credit cash
Recorded services provided on account
Debit A/R; Credit fees earned
Paid receptionist salary including amount owed in the previous month
Debit salaries expense and salaries payable; credit cash
Purchased supplies on account
Debit supplies; Credit A/P
Recorded cash from clients for fees earned
Debit cash; Credit fees earned
Paid telephone bill
Debit utilities expense; Credit cash
Withdrew money for personal use
Debit owner, withdrawals; Credit cash
Adjustment for supplies
Debit supplies expense; credit supplies for amount used (Beginning - amount on hand at the end)
Adjustment for insurance
Debit insurance expense; credit prepaid insurance for the amount expired
Adjustment for depreciation
Debit depreciation expense (asset); Credit accumulated depreciation (asset(
Adjustment forAccrued salaries
Debit salaries expense; Credit salaries payable
Adjustment for unearned fees
Debit unearned fees; Credit Fees Earned for the amount actually earned (may have to subtract actual amount earned and the amount in the trial balance for unearned fees)
Trial Balance
proves the equality of debits and credits
Worksheet
proves that everything works - used to determine the amount of net income or net loss
Temporary accounts
accounts whose balance is brought to zero at the end of the period in the closing process
Closing Entry for Revenue
Revenue
Income Summary
Closing Entry for Expenses
Income Summary
Credit each expense individually
Closing Entry for Withdrawals
Owner, Capital
Owner, Withdrawals
Closing Entry for Income Summary
If Net Income: Debit Income Summary and Credit Capital for the amount of net income
If Net Loss: Debit Capital and credit income summary for the amount of the loss
Post closing trial balance
Last step of the cycle - done after closing and only as permanent accounts (A, L, C)
Service Business
A business operated to provide (do something) for clients
Business entity concept
The entity is an individual economic unit for which data are recorded, analyzed and reported
Amount to be used to record acquisition of an asset
Total cost of getting asset to the business (Cash + notes payable + installation)
Prepaid expenses
Goods purchased on account for future use
Statement of Cash Flows
statement that shows how money flowed into and out of the business
Journalizing
The process (act) of initially recording a business transaction
Debit
Left side of an account
Credit
Right side of an account
Liabilities
Debts to owner, accounts usually say payable, cash received before services ar performed
Journal
where a transaction can first be found in the accounting records
Assets begin with what number
1
Adjusting entries affect
at least one income statement and one balance sheet account
Unearned Revenue
Likely to be included in a deferral adjusting entry
Business pays weekly salaries of $30,00 on Friday for five day work wee ending that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is
Debit Salary Expense; Credit Salaries Payable $12,000
Accumulated Depreciaiton
Contra asset, credit balance
Appears on an adjusted trial balance but probably not on the trial balance
Depreciation Expense
Order of end of period processing
Preparation of adjustments, adjusted trial balance, financial statements
Classified Balance Sheet
Separates Liabilities into current and long-term
Item 1 hAs inventory of 12 unit cost was $15 and market was $18
Determine the value if inventory at lower of cost or market
Cost of merchandise sold year 1 was $172,000 and year 2 was $160,000 and inventory year 1 was 20,000 and year 2 was 18,000
Determine inventory turnover , average daily cost of mdse sold, number of days’ sales in inventory
