Module 3 - Accounting Foundational Elements

Question 1

Accounting Equation

Answer 1

Assets= Liabilities+ Stockholders Equity

Question 2

T account

Answer 2

The name of the account such as cash appears across the top of the T. We record debits on the side of the vertical line of the T account and Debits on the other side

Question 3

Journal

Answer 3

an arranged in order of time record of business transactions

Question 4

Ledger

Answer 4

the complete collection of all the accounts in a company (includes all transactions in trial balance order)

Question 5

Stockholders equity

Answer 5

E=A-L
owners claim on total assets
Common Stock and Retained earnings

Question 6

Assets

Answer 6

Resources a business owns, provides future services or benefits, cash, supplies, equipment

Question 7

Liabilities

Answer 7

Debts and obligations
accounts payable
notes payable
salaries
wages
 taxes payable

Question 8

4 things that affect equity

Answer 8

1. Revenues
2. Expenses
3. Investments by stockholders
4. Dividends

Question 9

Source documents

Answer 9

provides evidence that business transaction occurred.

Question 10

Transaction entry

Answer 10

recording of a business transaction in the journal

Question 11

Steps in Recording Business transactoin

Answer 11

1. The company enters into a business transaction as the result of a management decision.
2. The company transaction is evidenced to be a source document
3. The source document serve as the basis for preparing an entry to record the transaction.
4. The entry is posted to the respective accounts in the ledger.

Question 12

retained earnings

Answer 12

Revenue - expenses -dividends

Question 13

General Ledger accounts (trial balance)

Answer 13

• assets
• liabilities
• owners equity
• revenue
• Expenses

Question 14

assets

Answer 14

Cash, accounts receivable, supplies, equipment, inventory, property, plant, and equipment

Question 15

liabilities

Answer 15

accounts payable, notes payable, unearned revenue

Question 16

Owners Equity

Answer 16

common stock, Retained earnings, capital

Question 17

revenue

Answer 17

sales revenue, interest revenue, dividend revenue, rent revenue.

Question 18

expenses

Answer 18

car repair expense, travel, entertainment, salary, miscellaneous

Question 19

doubled entry procedure

Answer 19

the accounting requirement that each transaction be recorded by an entry that has equal dollar amounts of debits and credits

Question 20

Debit & Credit

Answer 20

Debit= left ; increase

credit =right ; decrease

Question 21

normal balance

Answer 21

the side the trial balance increases on

Question 22

nominal accounts

Answer 22

(temporary accounts) income statement accounts and the dividends are nominal because` they are merely sub classifications of the stockholders equity accounts

Question 23

type of account of the balance sheet account

Answer 23

real accounts- because they are no subclassifications or subdivisions of any other accounts. these are also permanent

Question 24

contra balance

Answer 24

when an accounts has a balance that is opposite from what it normally is

Question 25

transposition error

Answer 25

when two digits are places in a reverse amount ex/ 110 as 101 or 735 as 537