Accounting 2010 Exam Prep Questions and Correct Answers

Accounting cycle Transactions-- journal entry in general journal-- post journal in general ledger--prepare trial balance entry-- prepare income statement and balance sheet Accounting equation (3 ways) Assets = Liabilities + Owner's Equity Assets = Liabilities + Owner's Equity + Net Income Assets = Liabilities + Owner's Equity + Revenue - Expenses Net income is equal to Revenue - expenses "stuff" economic resources the company owns and it expects will provide future benefits to the company Assets claims-to-stuff of someone who is NOT an owner, a debt or an obligation or a requirement for the company to pay back Liabilities claims-to-stuff of owners, what the owners have contributed to the company plus the accumulated net earnings Owner's Equity prices charged to customers, increases in assets, decreases in liabilities Revenue "sacrifices" to earn revenue, cos of providing goods and services, decrease in assets, increase in liabilities Expenses record keeping of a business activity, double entry accounting, 2 entries to be made that must be equal Journal Entry Where you record an individual journal entry General journal a summary of all journal entries recorded within the general journal General Ledger shows the companys' financial position on a given date Balance sheet an account that closes at the end of each year Temporary account When bought w/ cash or on credit, companies use this to record it Sales Revenue