Test 1
Increase common stock with a
Cr
We bought goods on terms of 2/10 n/30 and returned $200 dollars of it the next day. What is the adjusting journal entry>
Cr cash Cr merch/. inventory dr accts pay
A company borrowed $4000 at an interest rate of 9%. By the end of the accounting period the loan had been outstanding for 30 days. What it the adjusting entry?
Debit interest expense 30 bucks.
L. Lyons started a business and invested $4000 in exchange for common stock. The cash account (dr/cr) on the (right/left) side of the account and the common stock account would be (dr/cr) on the (right/left) of the account/
Debited/left/credited/right
Dividends, what they do to equity and what is it
Decreases equity and are the assets removed from a company and paid to the stockholders.
Expenses, what they do to equity and what it is
Decreases equity and are the costs or assets services used to earn revenue.
We sold $7000 worth of merchandise, it only cost us $500. What is the adjusting entry?
Dr cogs $500 Cr merch inventory $500
DOGS R US uses the perpetual inventory system to account for its merchandise. On May 1 it returned $50 of merchandise due to a defect. Assuming it was bought on credit what is the adjusting entry.
Dr. accounts payable Cr. merchandise inventory
Order of steps to complete a work sheet
Enter unadjusted trial balance Enter adjustments Prepare the adjusted trial balance Sort adjusted trial balance amounts to financial statements total financial statement columns Compute net income or net loss and add to the balance sheet colomuns
Statement of Cash Flows
Identifies the cash inflows and outflows over a period of time.
Public Accounting
Includes offering tax advice and auditing services.
Order that a company prepares financial statements
Income statement Statement of retained earnings Balance sheet Statement of cash flows
Income statement balance sheet statement of retained earnings order
Income statement statement of retained earnings balance sheet
Owner investments cause equity to...
Increase
We perform $200 worth of services but do not get paid right away, what happens?
Increase accounts receivable and cash
Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 dollars cash in investment for common stock. Record the transaction in the accounting equation.
Increase in cash and common stock.
To record the purchase of supplies for cash the accounting equation would call for...
Increase in supplies, decrease in cash
Investments, what do they do to equity and what is it
Increases equity and are assets the owner puts into the business
Revenues, what they do to equity and what it is
Increases equity and are the assets earned from a company's earning activities .
Creditor
Individuals or organizations that have rights to receive payments from a company.
Private Accounting
Is the part of accounting where employees work for a business.
Steps in the trial balance
List each account and its amount from the general ledger Compute total dr and cr balances Verify that they are equal locate and resolve errors
Three sections of the statement of cash flows include
Operating, financing, and investing
Classified balance sheet has several categories for assets and liabilities
Plant assets current assets long term investments current assets
An employee that has unpaid bills might exhibit the following fraud factor
Pressure
Balance sheet
Reports the balance of assets, liabilities, and equity at a point in time.
Statement of Retained Earnings
Reports the changes in equity for a period of time.
Income statement
Reports the revenues an expenses incurred by a company over time.
What accounts affect equity
Revenue Expenses Dividends Common Stock
The income statement describes a company's (assets/revenues) and (expenses/liabilities) along with the resulting net income or loss over a period of time due to earnings related activities.
Revenues/expenses
Johna's Plant Nursery pays the salaries of two of its employees. How will the transaction affect the accounting equation?
Salaries expense will increase Equity will decrease
Asset is
Something of value that a company owns or has title to.
On 6/25 a company bought $1000 worth of supplies. On 6/25 they paid $400 of it. The remainder went on account. What is the transaction.
Supplies increased by $1000 Cash decreased $400 accounts payable increased $600
Revenue
The dollars earned of services performed or products sold.
When recording transactions into the accounting equation what is true...
The equation must always remain in balance At least two accounts are affected Assets must always equal liabilities plus equity
Equity
The residual interest in the assets of a business after deducting the businesses debt.
The accounting equation reflects
The total of what a business owns at any point in time will equal the total of what it owes creditors or owners
Accounts that appear on the Income Statement
Utilities Expense Rent Expense
What is true regarding adjusting journal entries
a balance sheet account and income statement account are always used.
Accounts on a balance sheet
accts pay common stock equipment retained earnings at the end of the period total assets and liabilities
Merchandise inventory available for sale is considered an (asset/expense/revenue) and is reported on the (balance sheet/income statement) and merchandise that is sold during the period is considered an (asset/expense/liability) and is reported on thre (balance sheet/income statement).
asset/balance sheet/expense/income statement
Things that have a norm dr. balance
cash, dividends, expenses
Income summary account is (dr/cr) for the sum of all revenue accounts, and is (dr/cr) for all expense accounts) and its balance will be transferred to the (retained earnings/cash) account
cr/dr/retained earnings
Gross method merch inventory is recorded
day of
Merch balance at the end of the year was $15,050 but a physical count reveals that there is only $15,000. what is the adjusting entry?
debit cogs 50 and credit merch 50
Dividends cause a(n) (increase/decrease) in equity an are recorded directly in the (retained earnings/dividends/equity) account.
decrease/dividends
Is a collection of all accounts with their activity and balances that exist in a business
general ledger
The gross method initially records the invoice at gross amount (deducting/ignoring) the cash discount but, the net method initially records the invoice at its net amount assuming the cash discount(was/wasn't) taken.
ignoring/was
Order that financial statements are prepared
income statement statement of owners equity balance sheet statement of cash flows
sally opens a business with an investment of 10,000 in exchange for common stock what happens
increase cash and common stock
in the accounting cycle you journalize and then
prepare
Steps in preparing an adjusting entry
prepare and unadjusted trial balance Journalize and post adjusting entries Prepare adjusting entries Prepare financial statements
Permanent accounts some of em
retained earnings, accumulated depreciation, accounts payable
Another order for multi step income statement
sales cogs gross profit operating expenses income from operations other revenues and expenses
Proper heading on a balance sheet
shows a specific date name of financial statement is listed after company name company name is listed at the top of the heading
Both net an gross record purchase
the day we pay for it
Net method we debit the discount lost
the day we pay if out of discount period
Accounts that might need adjusted at the end of a period
unearned revenue, prepaid rent, and supplies
It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.
A chart of accounts
3 things about a liability. Think of it in relation to the accounting equation and what it is.
A creditor's claim against the assets of a business. The company obligations to provide assets, products, or services to others. Amount owed to a creditor.
It is a book of original entry that includes chronological record of all transactions that have occurred with a business during a period occurred
A journal
It is a list of each account and its balance at any given time and is used to verify that debits = credits
A trial balance
Why does a business need accounting information
Accounting records business transactions and communicates financial information.
Both Private and Public accounting
Accounting specialists are highly regarded
Accounts that appear on the balance sheet
Accounts Payable Supplies Retained Earnings Equipment Cash
When supplies are bought on credit it means that
Accounts Payable will be increased The business will pay for the supplies at a later time A liability has been incurred
When a business provides a product of service to its customer "on credit" it means...
Accounts receivable will be increased An asset has been created on increased The business will receive payment at a later time
The expanded accounting equation is
Assets = Liabilities + Common Stock + Revenues - Expenses - Dividends
What account would be decreased if Hillary's Hair Salon pays 440 cash dividends to its shareholders?
Cash
Owner investments
Cash or other assets an owner puts into the business.
Dividends of $60 cash are paid to stockholders. What happens? Decreasing the (cash/accounts receivable) account and (Increasing/decreasing) the dividends account.
Cash/increasing
Equity refers to
Claims of the owners on the assets of a business.
The for major types of transactions that affect equity in a business are...
Common stock, dividends, revenue, expense accounts.
