Accounting Cycle: Steps 1-4

What is the term for the cost of goods or services used to operate a business?

expense

True or False. Accounts Payable are an asset account.

false

What is the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current?

file maintenance

True or False. When analyzing accounts, debits must equal credits for each transaction.

true

What source document is used for the daily total of cash sales?

calculator tape

What is the first step in the Accounting Cycle?

collecting and verifying source documents

What is the normal balance of an Accounts Receivable account?

debit

Which source document is used when there is no other source document for a transaction?

memorandum

What is the difference between assets and liabilities?

net worth/equity

What is the fourth step of the Accounting Cycle?

posting to the general ledger

What is accounting?

the process of planning, recording, analyzing, and interpreting financial information

What does an asset account number begin with?

1

What are the two types of accounts used when preparing a Chart of Accounts?

Balance sheet and Income statement

What does an expense account number begin with?

5

Where are transactions recorded with many transactions on the same page?

general journal

Which side of the chart of accounts tells what the company is worth?

left side

What is a written acknowledgement for cash received other than sales?

receipt

Which two accounts under Owner's Equity have a normal balance of credit?

sales and capital

What are the two accounts on the right side of the chart of accounts?

sales and expenses

What is the source document used when services are sold on account?

sales invoice