Podcast
Questions and Answers
What are the steps involved in transaction analysis?
What are the steps involved in transaction analysis?
In double-entry accounting, what must always be true about debits and credits?
In double-entry accounting, what must always be true about debits and credits?
Which of the following accounts is increased by a debit?
Which of the following accounts is increased by a debit?
What does the accounting equation represent?
What does the accounting equation represent?
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Which mnemonic can help remember the normal balance of accounts?
Which mnemonic can help remember the normal balance of accounts?
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What accounts are affected when cash is paid for office equipment and part of the balance is placed on account?
What accounts are affected when cash is paid for office equipment and part of the balance is placed on account?
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What will be the effect on the accounting equation after the office equipment transaction?
What will be the effect on the accounting equation after the office equipment transaction?
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When consulting revenues are recognized, which accounts are impacted?
When consulting revenues are recognized, which accounts are impacted?
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For the advance fees received for consulting referrals, which account should be credited?
For the advance fees received for consulting referrals, which account should be credited?
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What is the total amount of cash collected from the bridal arrangements if each couple pays P8,800?
What is the total amount of cash collected from the bridal arrangements if each couple pays P8,800?
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What impact does the transaction of acquiring office equipment have on the balance sheet?
What impact does the transaction of acquiring office equipment have on the balance sheet?
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Which accounting rule is applied when recording an increase in cash from consulting fees?
Which accounting rule is applied when recording an increase in cash from consulting fees?
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What type of entry is required to record the office equipment purchase with both cash and accounts payable?
What type of entry is required to record the office equipment purchase with both cash and accounts payable?
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What is the primary purpose of source documents in accounting?
What is the primary purpose of source documents in accounting?
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What is the first step in the accounting process outlined?
What is the first step in the accounting process outlined?
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Which document is NOT considered a source document in the accounting process?
Which document is NOT considered a source document in the accounting process?
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What is the main aim of preparing a trial balance?
What is the main aim of preparing a trial balance?
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Which process follows the recording of transactions in the journal?
Which process follows the recording of transactions in the journal?
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What is the primary aim of the worksheet in the accounting cycle?
What is the primary aim of the worksheet in the accounting cycle?
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Which term refers to the total revenues minus total expenses?
Which term refers to the total revenues minus total expenses?
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What does the preparation of financial statements provide to decision-makers?
What does the preparation of financial statements provide to decision-makers?
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What was the initial investment amount made by Yolanda Sayson, Besario into her wedding consultancy?
What was the initial investment amount made by Yolanda Sayson, Besario into her wedding consultancy?
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When assets increase due to the investment, how is it recorded in accounting?
When assets increase due to the investment, how is it recorded in accounting?
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What recording method is applied when Rented office space is paid in advance?
What recording method is applied when Rented office space is paid in advance?
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Which entry correctly reflects the payment for two months' rent in advance?
Which entry correctly reflects the payment for two months' rent in advance?
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What happens to liabilities when a promissory note for a loan is issued?
What happens to liabilities when a promissory note for a loan is issued?
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What rate of interest is associated with the loan from Metrobank?
What rate of interest is associated with the loan from Metrobank?
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How is the increase in assets from the loan recorded?
How is the increase in assets from the loan recorded?
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Which of the following accounts is credited when the loan from Metrobank is recorded?
Which of the following accounts is credited when the loan from Metrobank is recorded?
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What is the correct accounting entry when an asset increases?
What is the correct accounting entry when an asset increases?
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How are increases in liabilities recorded?
How are increases in liabilities recorded?
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What happens to owner's equity when the owner withdraws cash for personal expenses?
What happens to owner's equity when the owner withdraws cash for personal expenses?
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What is the primary purpose of a general ledger?
What is the primary purpose of a general ledger?
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Which accounts are classified as permanent accounts in the general ledger?
Which accounts are classified as permanent accounts in the general ledger?
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What type of accounts gather information for a particular accounting period?
What type of accounts gather information for a particular accounting period?
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In which section of the ledger do you find the account number and journal reference?
In which section of the ledger do you find the account number and journal reference?
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What is the entry to record a $10,000 increase in cash associated with unearned referral revenues?
What is the entry to record a $10,000 increase in cash associated with unearned referral revenues?
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Study Notes
Transaction Analysis
- Transaction analysis helps to understand the financial impact of business events
- Transaction analysis uses the accounting equation to record changes in assets, liabilities, and equity
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Transaction analysis follows these steps:
- Identify the transaction and source documents
- Indicate the accounts affected and if they are increased or decreased by the transaction
- Determine whether to debit or credit the account using the rules of debit and credit
Basic Accounting Concepts
- Debit increases assets, expenses, and withdrawals, while credit increases liabilities, owner’s equity, revenue, and beginning capital
- The double-entry system ensures every transaction has a dual effect (one debit and one credit), keeping the accounting equation balanced
Source Documents
- Source documents provide essential information about business transactions
- Common source documents include:
- Sales invoices
- Official receipts
- Purchase orders
- Statements of account
- Bank deposit slips
- Checks
Accounting Cycle
- Accounting cycle is a systematic process that ensures transactions are accurately recorded and summarized
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Accounting cycle steps:
- Identify events to be recorded
- Record transactions in the journal
- Post journal entries to the ledger
- Prepare a trial balance to verify the equality of debits and credits
- Prepare a worksheet including adjusting entries
- Prepare financial statements
General Ledger
- General ledger is the central reference book for accounting information
- General ledger classifies and summarizes transactions
- General ledger accounts can be either permanent (asset, liability, owner’s equity) or temporary (income, expense)
- General ledger uses the T-account format, but offers additional information like account number and journal reference
Transaction Examples
- Investing in a business: Increase in cash (asset) and owner’s equity
- Paying rent in advance: Increase in prepaid rent (asset) and decrease in cash (asset)
- Receiving a loan: Increase in cash (asset) and increase in notes payable (liability)
- Purchasing equipment partly on credit: Increase in office equipment (asset), decrease in cash (asset), and increase in accounts payable (liability)
- Providing services: Increase in cash (asset) and increase in consulting revenues (owner’s equity)
- Receiving advance fees: Increase in cash (asset) and increase in unearned referral revenues (liability)
- Withdrawing cash for personal expenses: Decrease in cash (asset) and decrease in owner’s equity (withdrawal)
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Description
This quiz delves into transaction analysis and its significance in understanding financial impacts within business events. It covers the accounting equation, the double-entry system, and the usage of source documents in recording transactions. Test your knowledge and recall of these fundamental accounting concepts.
