question

Assets, Expenses, and Dividends

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Debits go up in these accounts

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Liabilities, Revenues, and Common Stock

answer

Credits go up in these accounts

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Cash, Common Stock

answer

Investors contributed $8,000 to the corporation in exchange for common stock

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Equipment, Accounts Payable

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Purchased equipment for $2,000 on account

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Office Supplies, Cash

answer

Paid $300 for office supplies

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Cash, Service Revenue

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Received $2,100 cash for consulting with Plummer and Gorden

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Wages Expense, Cash

answer

Paid $200 for wages to employees

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Dividends, Cash

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Paid cash dividends of $6,700

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Accounts Receivable, Service Revenue

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Performed services for a hotel and received its promise to pay the $1,000 within one week

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Rent Expense, Cash

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Paid $800 for rent

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Utilities Expense, Accounts Payable

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Received a bill for $150 for the monthly utilities. The Bill has not yet been paid.

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Cash and Office Furniture, Common Stock

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Parker opened an accounting firm by contributing $14,000 cash and office furniture with a fair market value of $5,200 in exchange for common stock. Prepare a compound entry.

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Office supplies, Accounts Payable

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Purchased office supplies on account, $900

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Salaries Expense, Cash

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Paid assistant's semimonthly salary, $1,490

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Utilities Expense, Utilities Payable

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Received a bill for utilities to be paid next month, $250

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Accounts Payable, Cash

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Paid for the furniture purchased on September 4 on account

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Rent Expense, Cash

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Paid monthly rent on medical equipment

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Cash, Notes Payable

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Borrowed $23,000 from the bank for business use

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Advertising Expense, Advertising Payable

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The business received a bill for advertising in the daily newspaper to be paid in August, $240

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Cash and Accounts Receivable, Service Revenue

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Revenues earned during the month included $6,500 cash and $5,800 on account. Record as a compound entry.

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Cash, Unearned Revenue

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The business received $1,140 for medical screening services to be performed next month

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Prepaid Insurance, Cash

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Paid $1,200 cash for a 12-month insurance policy starting on October 1

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Unearned Revenue, Rent Revenue

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August 1, a business collected $3,300 rent in advance, debiting Cash and crediting Unearned Revenue. the tenant was paying one year's rent in advance. At December 31, the business must account for the amount of rent it has earned

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Salaries Expense, Salaries Payable

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Each Monday, College Park pays employees for the previous week's work. The amount of weekly payroll is $5,600 for a seven-day workweek (M-Sun). This year December 31 falls on Thursday.

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Supplies Expense, Office Supplies

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The unadjusted balance of the Office Supplies account is $3,500. Office Supplies on hand total $1,700

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Depreciation Expense, Accumulated Depreciation

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Equipment depreciation was $300

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Insurance Expense, Prepaid Insurance

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On March 1, when the business prepaid $600 for a two-year insurance policy, the business debited Prepaid Insurance and credited Cash.

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Unearned Revenue, Service Revenue

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College Park had earned $3,200 of unearned revenue.

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Interest Expense, Interest Payable

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College Park had incurred (but not recorded) $150 of interest expense on a note payable. The interest will not be paid until February 28.

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Accounts Receivable, Service Revenue

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College Park billed customers, $6,000, for welding services performed.

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Accounts Receivable, Service Revenue

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On October 1, Arlington agreed to provide a four-month air system check (beginning October 1) for a customer for $3,200. Arlington completed the system check every month but payment has not yet been received and no entries have been made.

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Service Revenue, Income Summary

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Close the Service Revenue account

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Income Summary, Expense accounts

answer

Close the expense accounts

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Income Summary, Retained Earnings

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Close the Income Summary

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Retained Earnings, Dividends

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Close the Dividends accounts

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Accounting

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Information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

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Financial Accounting Standards Board

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Creates the rules and standards that govern financial accounting

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Securities and Exchange Commission

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Oversees the US financial markets

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Generally Accepted Accounting Principles

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Issued by the FASB, establishes the rules for recording transactions and preparing financial statements

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Chart of Accounts

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Companies typically maintain a listing of all of the accounts that they use in their accounting system, often numbered and grouped by account type

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Trial Balance

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Primary purpose is to prove the mathematical equality of debits and credits after posting

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Debt Ratio

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Total Liabilities/Total Assets

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Cash Basis

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Revenue is recorded when Cash is received; Expenses are recorded when cash is paid; not allowed under GAAP

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Accrual Basis

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Revenue is recorded when it is earned; expenses are written when incurred; generally used by larger businesses

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Time Period Concept

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Assumes that a business's activities can be sliced into segments and that financial statements can be prepared for specific time periods, such as month, quarter, or year

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Fiscal Year

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Any twelve month period

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Revenue Recognition Principle

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Revenue should be recorded when it is earned

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Matching Principle

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Expenses are recorded when they are incurred during the period; Expenses are matched at the end of the period against the revenues for that period

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Current Assets

answer

Cash, A/R, Office Supplies, Prepaid accounts are all

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Plant Assets

answer

Furniture, Buildings, Land, Accumulated Depreciation, Equipment, Vehicles, are all

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Current Liabilities

answer

A/P, Interest Payable, Notes Payable, Utilities Payable, Salaries Payable, and Unearned Revenue are all

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Long-Term Liability

answer

Notes Payable is a

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Current Ratio

answer

Total current assets/total current liabilities

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Financial Accounting

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External Decision Makers

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Managerial Accounting

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Internal Decision Makers

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Intangible

answer

Copyright, patent

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Long-Term Assets

answer

Stocks, Bonds, Other long term Investments are all

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