Midterm Review Flashcards
5 Major Classifications
Assets Liabilities SE Revenues Expenses
Normal credit balance of five classifications
Libilities
Revenues
SE
normal debit balance of five classifications
Assets
Expenses
Types of accoutning
Managerial
Financial
Financial accounting
external users with info
(employees, consumers, IRS, investors, rivals, lenders, Bank suppliers
Managerial Accounting
provide internal users with info
managers
Current Liability
considered current if less than a year old
debt paid
Closing Entries (in order)
Revenue
Expense
Income Summary
Dividends
What is the journal entry to record the cash sale of capital stock to SE?
Cash
Capital Stock
Business Entity Concept
concept relates to separating business and personal finances
Journalizing
recording transaction to journal
How do you close dividends?
Retained Earnings
Dividends
How do you close Revenue?
Revenue
Income Summary
What happens on the Retained Earnings Statement?
(Starting Retained Earnings)+(Net Income)-(Dividends)
How do you close Income Summary? (if net income)
I.S.
R.E.
How do you adjust used supplies?
Supplies Expense
Supplies
Adjusting Entries always include…
one debit, one credit
on Balance Sheet account, one Income Statement account
Depreciation
$ value decreases over time
Which type of accounting is required by GAAP?
Accrual Basis
Accounting Equation
Assets= Liabilities+ SE
Accounting used in the USA
FASB (Financial Accounting Standards Board)
Corporation
Stocks
Revenue Recognition
record revenue when earned, not received
Liabilities
debts owed by a business
After posting 2nd closing entry to the Income Summary, Balance will be equal to the…
NET INCOME (rev-exp=net income)
Type of account of Accumulated Depreciation
Contra-Asset (normal balance credit)
Receipt of Cash for rent, 2 months in advance
Cash
Unearned Rent
Trial Balance
Verification that debit=credit
CPA
certified public accountant- accountant that practices as an individual or member of accounting firm
2 Transaction that decrease Stockholder’s Equity
Expenses, Dividends
Adjusting entry for wages:
end of period on tuesday
pay 50,000 a week
Dr. Wages Exp 20,000
Cr. Wages Pay 30,000
Process of transferring debits and credits to the ledger is…
POSTING
Order of Preparing Financial Statements
Income Statement
Retained Earnings
Balance Sheet
Cash Flow
Debit side of account
left
credit side of account
right
What financial statement is Accum. Depreciation recorded on?
Balance Sheet
under:
(Property, Plants, Equip) or FIXED ASSETS
Book Value
difference between initial value and accum depreciation: (initial value-accum.dep)
Prior to adjusting process, accrued Revenue is…
earned,
not recorded
Prior to adjusting process, accrued Expense is…
incurred,
not paid,
not recorded
Which fixed asset is not depreciated?
LAND
Purpose of adjusting entries is to…
update accounts
