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Study Material - ACCT > Version 02 > Flashcards

Version 02 Flashcards

1
Q

When an asset decreases there are four likely reasons

A
  1. Acquire an asset for cash (DR Assets increase, CR Assets decrease; common)
  2. Pay off a liability, usually with cash (DR Liabilities decrease, CR Assets decrease; common)
  3. Buy back stock from shareholders, usually with cash (DR POE decease, CR Assets decrease; occasional)
  4. Pay an expense, usually with cash (DR Exp increase, CR Assets decrease; common)
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2
Q

When a liability increases there are three likely reasons

A
  1. Borrow money, buy an asset on credit, or receive an advance from a customer (DR Assets increase, CR Liabilities increase; common)
  2. Declare a dividend (DR POE decrease, CR Liabilities increase; occasional)
  3. Incur an expense not yet paid (DR Exp increase, CR Liabilities increase; common)
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3
Q

When PEO goes up there is only one reason

A
  1. Sell stock to shareholders (DR Assets increase, CR POE increase; occasional)
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4
Q

When revenue increases there are two likely reasons

A
  1. Earn a revenue that was received now (cash) or will be received later (receivable) (DR Assets increase, CR Rev increase; common)
  2. Earn a revenue that was received previously (DR Liabilities decrease, CR Rev increase; common)
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5
Q

Purchase inventory for cash

A 
DR Inventory (A)
CR Cash (A)
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6
Q

Collect receivable from previous credit sale to customer

A 
DR Cash (A)
CR AR (A)
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7
Q

Purchase insurance in advance

A 
DR Prepaid Insurance (A)
CR Cash (A)
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8
Q

Borrow money from a bank

A 
DR Cash (A)
CR Loan Payable (L)
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9
Q

Buy inventory on account (credit) that will be paid later

A 
DR Inventory (A)
CR AP (L)
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10
Q

Receive advance payment from a customer, good or service to be provided later

A 
DR Cash (A)
CR Deferred Revenue (L)
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11
Q

Receive advance payment from a customer, good or service to be provided later

A 
DR Cash (A)
CR Deferred Revenue (L)
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12
Q

Pay for inventory previously purchased on account

A

CANCEL

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13
Q

Pay for wages previously recorded as an expense and a liability

A 
DR Wages Payable (L)
CR Cash (A)
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14
Q

Record a cash sale

A 
DR Cash (A)
CR Sales Revenue (R)
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15
Q

Record a credit sale

A 
DR AR (A)
CR Sales Revenue (R)
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16
Q

Record revenue for providing a good or service that was paid for in advance

A

DR Deferred Revenue (L)

CR Sales Revenue (R)

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17
Q

Record wages due to employees that have not yet been paid

A

DR Wage Expense (Exp)

CR Wages Payable (L)

18
Q

Record interest due on a loan that has not yet been paid

A

DR Interest Expense (Exp)

CR Interest Payable (L)

19
Q

Record expense related to sale of inventory

A 
DR COGS (Exp)
CR Inventory (A)
20
Q

Record expense related to consumption of insurance paid in advance

A

DR Insurance Expense (Exp)

CR Prepaid Insurance (A)

21
Q

Record sale (issue) of common stock to shareholders

A 
DR Cash (A)
CR Common Stock (POE)
22
Q

Record repurchase of common stock from shareholders

A 
DR Common Stock (POE)
CR Cash (A)
23
Q

Record a declaration of cash dividends by the board of directors

A

DR Retained Earnings (POE)

CR Dividends Payable (L)

24
Q

Company sells common stock to shareholders for $5,000 in cash

A 
DR Cash (A) 5,000
CR Common Stock (POE) 5,000
25
Q

The company borrows $1,000 from a bank

A 
DR Cash (A) 1,000
CR Bank Loan (L) 1,000
26
Q

The company pays first and last month’s rent on a storage space for $300

A 
DR Prepaid Rent (A) 300
CR Cash (A) 300
27
Q

The company buys inventory for $1,500 on account

A 
DR Inventory (A) 1,500
CR AP (L) 1,500
28
Q

The company sells $200 worth of inventory for $350 in cash

A 
DR Cash (A) 350
CR Sales Revenue (R) 350
DR COGS (E) 200
CR Inventory (A) 200
29
Q

The company sells $500 worth of inventory for $800 “on account”

A 
DR AR (A) 800
CR Sales Revenue (R) 800
DR COGS (E) 500
CR Inventory (A) 500
30
Q

The company pays wages of $400 for the previous two weeks’ work

A 
DR Other Expense (E) 400
CR Cash (A) 400
31
Q

The company receives an advance payment from a customer for $600

A 
DR Cash (A) 600
CR Deferred Revenue (L) 600
32
Q

The company collects all $800 owed from sale on account

A

DR Cash 800

CR AR 800

33
Q

The company buys $500 in inventory on account

A

DR Inventory 500

CR AP 500

34
Q

The company provides $400 in inventory to the customer who paid in advance, completing that order from customer paying the $600 in advance previously

A

DR Deferred Revenue 600
CR Sales Revenue 600

DR COGS 400
CR Inventory 400

35
Q

The company owes employees $400 in wages to be paid next month

A

DR Other Expense 400

CR Wages Payable 400

36
Q

The company estimates that it consumed $100 worth of electricity during the month

A

DR Other Expense 100

CR Electricity Payable 100

37
Q

The company has consumed one month of rental services ($150)

A

DR Other Expense 150

CR Prepaid Rent 150

38
Q

The company owes the bank $10 in interest to be paid next month

A

DR Interest Expense 10

CR Interest Payable 10

39
Q

Starbucks declares a dividend of $30

A

DR Retained Earnings (-OE) 30

CR Accrued Liabilities (+L) 30

40
Q

Starbucks pays the dividend of $30 that was previously declared

A 
DR Accrued Liabilities (-L) 30
CR Cash (-A) 30

Study Material - ACCT (9 decks)

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