Accounting Test 1

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created 7 years ago by lsudduth
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1

normal balance

The side of an account that is increased.

2

double-entry accounting

A system in which each transaction has a dual effect on the accounting elements

3

normal balance for assets, expenses, & drawing accounts

debit balance

4

normal balance for liability, owner's equity, and revenue accounts

credit balance

5

to enter an amount on the left side of an account

debit

6

to enter an amount on the right side of an account

credit

7

What 3 questions should be asked in every transaction analysis

1. What happened?
2. What accounts are affected?
3. How is the account affected?

8

Accounting equation

Assets=Liabilities + Owner's Equity

9

What are 3 commonly prepared financial statements?

Income Statement, Statement of owner's equity, & Balance Sheet

10

Assets (+)

debit

11

Assets (-)

Credit

12

Liability (+)

credit

13

Liability (-)

debit

14

Owner's equity (+)

credit (rarely are there credits)

15

Owner's equity (-)

debit (same thing as a draw)

16

Expenses (+)

debit

17

Expenses (-)

credit (very rare)

18

3 parts of T accounts

Account, debits, & credits

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total of each side of T accounts

footings

20

difference in footings in credits and debits

balance of account

21

where is balance of account written

side with larger footing

22

Assets

cash, accounts receivable, equipment, buildings, land

23

Liabilities

accounts payable, notes payable

24

owner's equity

owner's investment, revenue, & expense items

25

Trial Balance

listing of all accounts and their balances,totaling dr. and cr. prooving they equal, & is prepared as an aid in preparing financial statements

26

What should be included in the heading of trial balance?

Name of Company, Type of document "Trial Balance", & date of trial balance

27

In what order are the accounts listed on a Trial Balnace?

Assets, Liabilities, Owner's Equity,Revenue accounts, & last the expense accounts

28

Wow do you know if you completed a Trial Balance correctly

Debits = Credits