Accounting Basics
Place the steps of the Accounting Cycle in the correct order. Financial Statements Corrective Adjustments Worksheet Adjusting Entries Record transactions as Journal Entries Identify Transactions Calculate Unadjusted Trial Balance Closing Posting to the General Ledger
1. Identify Transactions 2. Record transactions as Journal Entries 3. Posting to the General Ledger 4. Calculate Unadjusted Trial Balance 5. Corrective Adjustments Worksheet 6. Adjusting Entries 7. Financial Statements 8. Closing
Which are the two main types of Adjusting Journal Entries? Accruals Cash in Capital Contributions Cash out Deferrals
Accruals Deferrals
The XYZ Company took out a loan from a bank on Dec 1. The first interest payment is to be made the following year on June 30, but the company is preparing its financial statements of the year ending Dec 31 in the same month the loan originated. What type of Adjusting Journal Entry should be recorded? Deferred Expense Accrued Revenue Deferred Revenue Accrued Expense
Accrued Expense
The ABC Company delivered services on the last day of the month and sent an invoice for $4,400 the following week. What type of adjusting journal entry should be recorded? Accrued Expense Deferred Expense Accrued Revenue Deferred Expense
Accrued Revenue
Match each term in the accounting cycle adjusting process: Adjusting Journal Entry, Deferral, Accrual Align Revenues and Expenses to the correct time period. Revenues earned or expenses incurred that have not been previously recorded. Receipts of assets or payments of cash in advance of revenue or expense recognition.
Adjusting Journal Entry: Align Revenues and Expenses to the correct time period. Deferral: Receipts of assets or payments of cash in advance of revenue or expense recognition. Accrual: Revenues earned or expenses incurred that have not been previously recorded.
You are reading a General Ledger that was generated by accounting software. What information should you expect to find for each entry? Date, Description, Account Name, and Amount Assets, Liabilities, Equity, Income and Expenses Account, Debit, and Credit Revenue, Gain, Expense, Loss
Assets, Liabilities, Equity, Income and Expenses
Match each Balance Sheet component: Assets, Liabilities, AR, Current liabilities, Equity Monies the business owes to others. Money generated by a business or put into the business by its owners. What the business owns that can be converted to cash. Money owed the business in the short term. Utilities, taxes, payments toward long-term debts, interest payments and payroll.
Assets: What the business owns that can be converted to cash. AR: Money owed the business in the short term. Liabilities: Monies the business owes to others. Current Liabilities: Utilities, taxes, payments toward long-term debts, interest payments and payroll. Equity: Money generated by a business or put into the business by its owners.
When should adjusting journal entries be made? At the end of a period to correct errors found on financial statements. At the end of a period to correct accounts before financial statements are generated. At the beginning of a period to correct accounts before financial statements are generated. At the beginning of a period to correct accounts after financial statements are generated.
At the end of a period to correct accounts before financial statements are generated.
Match each accounting term: Average Cost Method, Accrual Basis, Cash Basis Revenue and expenses are recognized and recorded when they occur. Line items aren't documented until money exchanges hands. Also known as the Weighted-Average Method.
Average Cost Method: Also known as the Weighted-Average Method. Accrual Basis: Revenue and expenses are recognized and recorded when they occur. Cash Basis: Line items aren't documented until money exchanges hands.
Which two financial statements are always impacted when posting Adjusting Journal Entries? (choose 2) Projected Expenses Cash on Hand Balance Sheet Income Statement Cost of Goods Sold
Balance Sheet Income Statement
The ABC Company receives a deposit on Dec 1 for work to be completed the following February. The company is preparing its financial statements for the year ending Dec 31 in the same month the deposit was received. What type of Adjusting Journal Entry should be recorded? Accrued Revenue Deferred Revenue Accrued Expense Deferred Expense
Deferred Revenue
In the accounting cycle, which two accounts are closed and zeroed out in preparation for the next cycle? Expenses Assets Debits Revenues Credits
Expenses Revenues
According to the Framework of IAS/IFRS, which two are an underlying assumption for the preparation o financial statements? Revenue/Expense basis Cash basis Balanced Accounts basis Going Concern basis Accrual basis
Going Concern basis Accrual basis
A public bookkeeper has responsibilities to which three parties? (choose three) society the bookkeeping and accounting profession the employer local chamber of commerce social media followers news media
society the bookkeeping and accounting profession the employer
The XYZ Company pays its insurance premiums quarterly. The company made a $600 payment in June to cover June, July, and August. You are the bookkeeper and must account a portion of this payment for the month of July. What type of adjusting journal entry should be recorded? Deferred Revenue Accrued Revenue Accrued Expense Deferred Expense
Deferred Expense
Match the FOUR most important financial statements: Statement of Cash Flow, Balance Sheet, Income Statement, Statement of Equity Shows a business's assets, liabilities and owners' equity at a specific point in time. Shows the revenues, gains, expenses and losses in both operating and non-operating activities of a business during a specific period of time. Shows the opening balance and ending balance of earned profits, dividends, inflow from shareholders, and payouts to shareholders. Shows the money coming in and going out of a business as it relates to operating, investing and financing activities during a specific period of time.
Balance Sheet: Shows a business's assets, liabilities and owners' equity at a specific point in time. Income Statement: Shows the revenues, gains, expenses and losses in both operating and non-operating activities of a business during a specific period of time. Statement of Equity: Shows the opening balance and ending balance of earned profits, dividends, inflow from shareholders, and payouts to shareholders. Statement of Cash Flow: Shows the money coming in and going out of a business as it relates to operating, investing and financing activities during a specific period of time.
You are reading a Journal that was generated by accounting software. What information should you expect to find for each transaction? (choose two) Revenue, Gain, Expense, Loss Assets, Liabilities, Equity, Income and Expenses Date, Description, Amount Account, Debit, and Credit
Date, Description, Amount Account, Debit, and Credit
Which two statements demonstrate an understanding of T-Accounts? (choose 2) Debits are on the right and Credits are on the left. Credits increase asset or expense accounts, while debits decrease them. Debits increase asset or expense accounts, while credits decrease them. Credits decrease liability, revenue or equity accounts, while debits increase them. Debits decrease liability, revenue or equity accounts, while credits increase them.
Debits increase asset or expense accounts, while credits decrease them. Debits decrease liability, revenue or equity accounts, while credits increase them.
Which two statements describe how double-entry works in most accounting software? (choose 2) Most accounting software do not offer double-entry accounting. The bookkeeper enters transactions and categorizes those transactions into the right accounts, the software records the debits and credits. The bookkeeper must manually enter the debits and credits. Accounting software cannot create T-Accounts. Financial statements are generated automatically.
The bookkeeper enters transactions and categorizes those transactions into the right accounts, the software records the debits and credits. Financial statements are generated automatically.
