Test 2 Flashcards
Converting assets to expense
Debit expense
Credit asset
Converting liability to revenue
Debit liability credit revenue
Accruing unpaid expense
Debit expense
Credit liability
Accruing uncollected revenue
Debit asset
Credit liability
Accrue
Adding of interest or a different investment over a period of time
What will a adjusting entry affect
Income sheet and balance sheet
Prepaid expenses are what?
Assets
How would an asset become an expense
Process of depreciation
Where would you record depreciation
Income statement after expense
Straight line method
Depreciation expense = cost of the asset / estimated useful life
What happens to liabilities of unearned revenue as the services are provided
Move to the income statement
What is accruing unpaid expenses
Expense that will be paid on a later date
Salaries of employees
Interest on borrowed money
How is accruing unpaid expenses recorded
Debit expense
Credit liability
When is there and original entry
When cash is involved
Receive payment or something is paid in advance
Sales revenue is what type or account
Revenue
Sales return is what type of account
Contra Revenue
Sales discounts is what type of account
Contra revenue
Discounts lost is what type of account
Expense
Accumulated depreciation is what type of account
Contra asset
Deffinition of net sales
Total revenue sales- sales returns and allowances- sales discounts
How to find what is used in office supplies
Old amount- new amount
Prepaid insurance is recorded as what?
Asset
What is a temporary account
Revenue, expense, dividends, net income
What is recorded at gross price
Sales
If a company sells a product for 6000 as a cost of 1000 to them what would be debited and credited
Debit- Accounts received 1000
Credit- sales revenue 1000
Debit- cost of goods sold (expense) 6000
Credit- inventory 6000
