New Chapter 3:

Question 1

Describe the steps in the accounting cycle?

Answer 1

1. ) Analyze to see if it is a business transaction
2. ) Journalize the transaction
3. ) post to the General ledger
4. ) Trial balance
5. ) Adjusting Journal entries
6. ) Adjusted Trial balance
7. ) Post to Financial statements.
8. ) closing entries
9. ) Post closing trial balance.

Question 2

What are transcations?

Answer 2

Economic events, if the basic accounting equation is manipulated in the process it is a transaction.

Question 3

What is the basic accounting equation?

Answer 3

A = L + SE

Question 4

What accounts have a debit balance?

Answer 4

D: Debits are
E: expenses
A: assets
D: dividends

Question 5

What accounts have a credit balance?

Answer 5

Credits make up the rest:

• liabilities
• Stockholders Equity: Revenues, Common stock, or an increase to retained Earnings.

Question 6

Describe the order on the trail balance?

Answer 6

1. ) Current Assets: (descending in liquidity)
2. ) Long term Assets

3.) PP & E
4.) Intangible Assets
——————————-
1.) current liabilities
2.) long term liabilities.
———————————-
SE
- common stock
- Retained earnings
—————————–
* Revenues
* Expenses

Question 7

What is the only thing that a trial balance can tell you?

Answer 7

If debits = credits.

Question 8

What are source documents?

Answer 8

They provide evidence that a transaction has occurred.