Accounting Test 1

T account

A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions. A T-account represents a ledger account. A T-account may be used as a tool to visualize the effects of a transaction. A T-account will show the debit and credit effects of transactions.

account

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

reporting period

A reporting period is determined by the business. A one-year reporting period is known as the fiscal year. A reporting period can be one month, one quarter or one year.

source document

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

Which of the following accounts has a normal credit balance?

Accounts payable Unearned consulting revenue Common stock

normal debit balance

Buildings Accounts receivable Cash Supplies

Select the statements that are true regarding debiting and crediting.

For an account where a debit is an increase, the credit is a decrease. A debit can increase an expense account. A credit will always decrease an asset account. A debit or a credit can increase or decrease an account, depending on the account.

trial balance

It is a list of each account and its balance at any given time and is used to verify that debits = credits

Given the list of accounts below, identify which of them would appear on a balance sheet.

Supplies Equipment Accounts Payable Cash Retained earnings, 12/31

income statement

The statement describes a business's revenues and expenses over a period of time.

The correct definition of a balance sheet includes which of the following statements?

The statement reports assets, liabilities and equity at a point in time. The statement reports the financial position of a company at a point in time. The statement reports the equality of the accounting equation at any point in time.

accounting cycle

analyze transactions journalize post prepare unadjusted balnce adjust prepare adjusted balance prepare financial statements close prepare post closing reverse

liability

claim against assets

book value

cost - accumulated depreciation

accrued expenses examples

interest, rent, salaries

dentify the main sections on a statement of cash flows.

operating, investing, financing

Accrual Basis Accounting

reporting income when it is earned and expenses when they are incurred

Identify which of the following lists of accounts would belong on the statement of retained earnings.

retained earnings and dividens

Analyzing the accounting equation at the end of the month will reveal the following. Select all that apply.

revenues and expenses will change the equity account assets = liabilities + equity