ACT 205
a journal entry should contain which of the following information
- accounts and amounts credited and debited - the date - description of the transaction
The accounting cycle
- analyze transactions - record in journal entry form - post the journal entry to ledger - prepare initial trial balance - record the post adjusting entries - prepare adjusted trial balance - prepare the financial statements - record post closing entries - prepare a post closing trial balance
which accountants would require a debit to decrease
- liabilities - stockholder's equity
4 types of adjusting journal entries
- prepaid expense - unearned revenue - accured revenues - accured expenses
cash basis accounting
- revenue is recognized when cash is recieved - expense is recognized when cash is paid
accrual basis accounting
- revenue is recognized when earned - expense is recognized when incurred
What type of transactions are recognized at the end of the accounting period
Internal Transactions
fiscal year
a period of 12 months
elements of the accounting equation are represented by what, which are contained in the general ledger
accounts
when are adjusting entries made
at the end of each accounting period
a list of all the account numbers and account titles used by a company is referred to as a
charts of account
expense
cost of conducting business during the period
dividends are increased with a
debit
in a double entry accounting system, what represents the left side of the account
debit
after the accountant analyzes the impact of a transaction on the accounting equation, the next step is to
determine the accounts to debit and credit
dividend
distribution of cash to stockholders
Internal Transactions
do not include a separate economic entity
assets represent
economic benefits that remained at the end of the period
accrual basis accounting expense should be recognized...
in the period when the related revenue is recognized
a chronological record of all economic events affecting a firm is a
journal
the purpose of a general ledger is to
list all accounts used in recording the company's transactions
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as
posting
matching principle
requires that expenses be recognized in the same period as related revenues
Net income equals
revenues minus expenses
revenue recognition principle
revenues should be recognized when they are earned, not necessarily when cash is received
the purpose of an account is
summarize all transactions for that item
the full set of accounting procedures used to measure and communicate business transactions referred to as
the accounting cycle
accounts receivable are assets which represent
the amounts owed by customers
The primary purpose of a source document
to assist analyzing a transaction
accured expense
we paid cash after we incurred the expense and recorded a liability
prepaid expense
we paid cash for the purchase of an asset before we incurred the expense
unearned revenues
we receive cash and recorded a liability before we earned the revenue
accured revenues
we received cash after we earned the revenue and recorded an asset
what is a net loss
when expenses exceeding revenues
External Transactions
with a separate economic entity
