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