final exam Accounting

a classified balance sheet

organizes assets and liabilities into important sub groups

net income

revenue-expenses

what financial statement would you analyze to determine if a company distributed any of its profits to its shareholders

statement of retained earnings

account

the record used to accumulate monetary information for each individual asset, liability, stockholders' equity, revenue and expense item

double-entry bookkeeping

the system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance

double entry bookkeeping is best characterized as

the total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries

what is the primary objective of accounting?

to provide useful information for decision making

when are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

under the cash basis of accounting

the purchase of office equipment on credit has what effect on the accounting equation

assets increase and liabilities increase

credit

an entry made to the right side of an account

accounting cycle,

1. journal entries 2. post to ledger 3. unadjusted trial balance 4. adjusting entries 5. adjusted trial balance 6. adjusting entries 7. closing entries

the payment of employee salaries has what effect on the accounting equation

assets decrease and stockholders equity decreases

general ledger

a file or book which contains a record for all accounts used by a company, including the account balance

trial balance

a list of all accounts and their balances which is used to prove the equality of debits and credits as of a a specific date

chart of accounts

a list of all asset, liability, stockholders equity, revenue, and expense accounts, along with their assigned account numbers, which are used by a company is a

T account

an abbreviated version of an account which is useful for analyzing the effects of business transactions

the income summary account is used to

close the revenue and expense accounts

liabilities

decrease debits, increase credits

revenue

decrease debits, increase credits

stockholders equity

decrease debits, increase credits

debit entries are used to

increase asset accounts

assets

increase debits, decrease credits

dividends

increase debits, decrease credits

expense

increase debits, decrease credits

credit entries are used for

increasing liability accounts

closing entries

journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming period and to update the owner's capital account for the events of the period just finished