financial accounting 2023

expense account

Debit

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to

Interest Expense and credit to Interest Payable

separate cash registers

accountability

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the

amount of the insurance prepayment that remains to benefit future periods.

If certain assets are partially used up during the accounting period, then:

an asset account is decreased and an expense is recorded

The steps for creating an end of year adjustment entries

analyze, record, summarize in T-accounts, prepare trial balance, report financial statements

income and retained earning accounts

are temporary accounts that close at the end of the accounting period

common stock

credit

retained earnings

credit

dividend accounts

debit

dividends

debit

A company started the year with $3,750 of supplies on hand. During the year the company purchased additional supplies of $2,000 and recorded them as an increase to the Supplies asset. At the end of the year the company determined that only $750 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period?

debit supplies and credit supplies for $5,000

Sail, Incorporated pays its workforce on Fridays for a five-day workweek ending on that day. The payroll for a week is $165,000. If the accounting year-end falls on a Tuesday, the adjusting journal entry to record this will include a

debit to salaries and wages expense for $66,000

the order in which financial statements are prepared

income statement, statement of retained earnings, balance sheet, closing journal entries, closing trial balance

internal controls are used to

minimize risk, protect assets, insure accuracy of records, promote operational efficiency, encourage adherence to policies

Gross Profit

net sales - cost of goods sold

A contra-account

offsets, or reduces, another account

pre-numbered checks

preventing fraud

2/15, n30

2% discount will be made if the amount is paid in 15 day if not then the full amount must be paid in 30 days

deposit in transit

A deposit recorded by the company but not yet by its bank.

perpetual inventory system

A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.

Which of the following statements about adjusting entries is not correct?

Adjusting entries often affect the cash account

periodic inventory system

An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period.

Accounts Receivable

Debit

Assets

Debit

Balance Sheet Accounts

Permanent Accounts and they carry over into the next accounting period

Which of the following types of accounts are found in closing journal entries?

Revenue accounts, expense accounts, the Dividends account, and the Retained Earnings account

An adjusted trial balance is prepared after all the adjusting journal entries have been made to assure that the debits and the credits are equal.

The adjusted trial balance typically is used to prepare the financial statements.

The adjusting entry to record services earned but not yet billed requires:

a debit to Accounts Receivable and credit to Service Revenue

If an expense has been incurred but will be paid later, then:

a liability account is created or increased and an expense is recorded

Balance Sheet Accounts

assets, liabilities, stockholders equity

Accumulated Depreciation appears on the

balance sheet as a contra-asset account.

Cost of Goods Sold (COGS)

beginning inventory + purchases - ending inventory

adjusting entries affects

both income statements and balance sheet accounts

outstanding checks

checks issued and recorded by a company that have not been paid by the bank

Accounts Payable

credit

Liability Accounts

credit

Owner's Equity Accounts

credit

Revenue Accounts

credit

Angela is a tenant of Bruce. On March 1, Angela paid Bruce $2,400 for 3 months of rent. On March 31, Angela's adjusting entries will include a debit to

rent expense for $800 and credit to prepaid rent for $800

using passcodes

restricting access

When a deferral adjustment is made to a liability account, that liability becomes a

revenue

closing entries consist of

revenues, expense, dividends, and retained earning

The journal entries for petty cash establishment and replenishment.

the ONLY time petty cash is utilized is when you are establishing, reducing or increasing the fund. Petty cash in NEVER part of the replenishment journal entry.

internal controls

using passcodes, pre-numbered checks, separate cash registers