Fin Acct
The first step in starting a new business is to obtain cash from owners and/or creditors. What kind of activity is this?
Financing
Events that would NOT be recored as transactions in an accounting system
Hiring an employee, ordering supplies to be delivered and paid for in the future.
What are considered investing activities?
Purchasing a company logo, purchasing land, purchasing equipment.
The Land account is increased with an entry on the _____ side of the Land T-account
left
Assets=
liabilities + stockholders equity
What is the effect on SHE when a company purchases a cash register for a cash payment of $1,200?
no effect
In April, Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of may. In April, Pizza Aroma should record
nothing because an exchange of promises is not a transaction
Identify key activities necessary to start a business
obtain financing, purchase assets
The Retained earnings account is increased with an entry on the _____ side of the account.
right
When a business issues stock, what does it give to its owners?
Stock Certificates
A company paid $5,000 cash to purchase equipment. The company recorded a debit to Equipment of $5,000 and a credit to Cash of $500. This company's accounting records are
incorrect because debits do not equal credits
Company X recieves $10,000 from issuing stock to its owners. The effect on the accounting equation is
increase in assets, increase in stockholders equity
Accounts _______ is a liability account and represents amounts owed to suppliers
payable
When a company pays its supplier for the amounts owed, its Cash and Accounts ______ accounts are decreased.
payable
debits must always equal ____ in journal entries
credits
Acme Enterprises issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a
debit to cash of $20,000 and a credit to common stock of $20,000
The DOCUMENT that lists ALL of the daily journal entries but does not provide account balances, is the
journal
A company purchased land in exchange for a $25,000, 10-Year note payable. The increase in the Notes payable account would be recorded with a
Credit
On
...
The _______ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occured
cost
A company paid $2,000 cash to an employee for this month's salary. The entry to record this transaction would include a ____ to cash
credit
Components of a classified balance sheet in the proper order in accordance with GAAP.
1. Current Assets 2. Non-Current Assets 3. Current Liabilities 4. Non-Current Liabilities 5. Stockholders Equity 6. Total Liabilities and Stockholders Equity
List the steps in the account cycle in order
1. Record a journal entry 2. Summarize in the ledger (t-accounts) 3. Prepare an unadjusted trial balance 4. adjust the accounts 5. prepare financial statements 6. close the books
The journal entry to record the purchase of land for $30,000 includes
a debit to Land and a credit to Cash
Acme Enterprises borrowed $20,000 from Last Bank on a 5-year note payable. Acme's journal entry to record this transaction will include a
a debit to cash for $20,000 and a credit to notes payable for $20,000
Lox, Stock and Bagel, Inc issued $100,000 of stock. It recorded the transaction by increasing cash and decreasing contributed capital. As a result of this entry
the accounting equation will balance, but the transaction was recorded in the wrong accounts.
A company purchased a new cash register for a payment of $1,200. As a result of recording the purchase,
total assets remain the same, one asset is exchanged for another
What is the effect on total assets when a company buys a building in exchange for a 20-year note payable?
total assets will increase
