final exam Accounting
a classified balance sheet
organizes assets and liabilities into important sub groups
net income
revenue-expenses
what financial statement would you analyze to determine if a company distributed any of its profits to its shareholders
statement of retained earnings
account
the record used to accumulate monetary information for each individual asset, liability, stockholders' equity, revenue and expense item
double-entry bookkeeping
the system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance
double entry bookkeeping is best characterized as
the total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries
what is the primary objective of accounting?
to provide useful information for decision making
when are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?
under the cash basis of accounting
the purchase of office equipment on credit has what effect on the accounting equation
assets increase and liabilities increase
credit
an entry made to the right side of an account
accounting cycle,
1. journal entries 2. post to ledger 3. unadjusted trial balance 4. adjusting entries 5. adjusted trial balance 6. adjusting entries 7. closing entries
the payment of employee salaries has what effect on the accounting equation
assets decrease and stockholders equity decreases
general ledger
a file or book which contains a record for all accounts used by a company, including the account balance
trial balance
a list of all accounts and their balances which is used to prove the equality of debits and credits as of a a specific date
chart of accounts
a list of all asset, liability, stockholders equity, revenue, and expense accounts, along with their assigned account numbers, which are used by a company is a
T account
an abbreviated version of an account which is useful for analyzing the effects of business transactions
the income summary account is used to
close the revenue and expense accounts
liabilities
decrease debits, increase credits
revenue
decrease debits, increase credits
stockholders equity
decrease debits, increase credits
debit entries are used to
increase asset accounts
assets
increase debits, decrease credits
dividends
increase debits, decrease credits
expense
increase debits, decrease credits
credit entries are used for
increasing liability accounts
closing entries
journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished