Podcast
Questions and Answers
What is the equation for Assets?
What is the equation for Assets?
- Assets = Liabilities + Stockholder's Equity (correct)
- Assets = Common Stock + Retained Earnings
- Assets = Cash + Accounts Receivable + Supplies + Equipment (correct)
- Assets = Revenue - Expenses - Dividends
What are the components of Liabilities?
What are the components of Liabilities?
Accounts Payable + Bonds Payable
What is the definition of Stockholder's Equity?
What is the definition of Stockholder's Equity?
Common Stock + Retained Earnings
What does R/E stand for?
What does R/E stand for?
What is the cash transaction when common stock is issued for cash?
What is the cash transaction when common stock is issued for cash?
What is the journal entry for borrowing $43,650 by issuing bonds?
What is the journal entry for borrowing $43,650 by issuing bonds?
What is the cash entry for purchasing delivery trucks for $52,630?
What is the cash entry for purchasing delivery trucks for $52,630?
What is the revenue recorded for services performed to customers?
What is the revenue recorded for services performed to customers?
What is the journal entry when purchasing supplies on account for $6,100?
What is the journal entry when purchasing supplies on account for $6,100?
What is the amount paid for rent?
What is the amount paid for rent?
What is the entry for performing services on account for $11,000?
What is the entry for performing services on account for $11,000?
What is the journal entry for paying salaries of $26,270?
What is the journal entry for paying salaries of $26,270?
An ____ is an individual accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.
An ____ is an individual accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.
How are asset accounts affected by debits and credits?
How are asset accounts affected by debits and credits?
How are liability accounts affected by debits and credits?
How are liability accounts affected by debits and credits?
What is the normal balance for an accounts receivable?
What is the normal balance for an accounts receivable?
What balance does the cash account typically have?
What balance does the cash account typically have?
What is the balance type for dividends?
What is the balance type for dividends?
What is the balance type for accounts payable?
What is the balance type for accounts payable?
What is the balance type for service revenue?
What is the balance type for service revenue?
What is the normal balance for salaries and wages expenses?
What is the normal balance for salaries and wages expenses?
What happens to cash in the transaction where common stock is issued for $19,310?
What happens to cash in the transaction where common stock is issued for $19,310?
What is the entry for purchasing equipment for $8,660, paying part in cash?
What is the entry for purchasing equipment for $8,660, paying part in cash?
How do you record services performed on account for $18,000?
How do you record services performed on account for $18,000?
What is the cash movement for paying salaries of $1,200?
What is the cash movement for paying salaries of $1,200?
What is recorded when paying $2,640 cash on balance owed for equipment?
What is recorded when paying $2,640 cash on balance owed for equipment?
What is the cash movement for paying an $810 cash dividend?
What is the cash movement for paying an $810 cash dividend?
What is the entire group of accounts maintained by a company called?
What is the entire group of accounts maintained by a company called?
What does 'posting' refer to in accounting?
What does 'posting' refer to in accounting?
What is the term for the side which increases an account?
What is the term for the side which increases an account?
What is the purpose of a chart of accounts?
What is the purpose of a chart of accounts?
What does the left side of an account represent?
What does the left side of an account represent?
What is a source document?
What is a source document?
What shows the debit and credit effects of specific transactions?
What shows the debit and credit effects of specific transactions?
What is a trial balance?
What is a trial balance?
Which account has a credit normal balance?
Which account has a credit normal balance?
What is recorded when stockholders invest $21,438 cash in common stock?
What is recorded when stockholders invest $21,438 cash in common stock?
What entry is made for hiring a secretary-receptionist at a salary of $447 per week?
What entry is made for hiring a secretary-receptionist at a salary of $447 per week?
What is the entry for paying office rent of $1,072 for the month?
What is the entry for paying office rent of $1,072 for the month?
What does the transaction of purchasing architectural supplies on account for $1,548 show?
What does the transaction of purchasing architectural supplies on account for $1,548 show?
What happens when blueprints on a carport are completed and billed to the client for $2,263?
What happens when blueprints on a carport are completed and billed to the client for $2,263?
What is recorded when receiving an $834 cash advance for designing a new home?
What is recorded when receiving an $834 cash advance for designing a new home?
What is the entry when receiving $3,335 cash for services completed?
What is the entry when receiving $3,335 cash for services completed?
What is recorded when paying $1,788 to the secretary-receptionist for the month?
What is recorded when paying $1,788 to the secretary-receptionist for the month?
What entry is shown for paying $357 to Burlington Company for accounts payable?
What entry is shown for paying $357 to Burlington Company for accounts payable?
Study Notes
Accounting Equation
- Assets equal Liabilities plus Stockholder's Equity.
- Assets comprised of Cash, Accounts Receivable, Supplies, and Equipment.
- Liabilities consist of Accounts Payable and Bonds Payable.
- Stockholders' Equity includes Common Stock and Retained Earnings (R/E).
- Retained Earnings calculated as Revenue minus Expenses minus Dividends.
Issuance of Stock
- Issued common stock for cash totaling $145,840; affects Cash and Common Stock accounts equally.
Borrowing Funds
- Issued bonds to borrow $43,650; increases both Cash and Bonds Payable.
Equipment Transactions
- Acquired delivery trucks for $52,630 cash, reducing Cash and increasing Equipment.
- Purchased equipment costing $8,660, paying $3,800 in cash and financing the remainder via Accounts Payable.
Revenue Recognition
- Received $14,550 in cash for services, increasing both Cash and Revenue.
- Performed services on account, resulting in $11,000 increase in Accounts Receivable and Revenue.
Expense Payments
- Rent paid amounted to $5,900, reducing Cash while increasing Expenses.
- Salaries paid totaled $26,270, decreasing Cash and increasing Expenses.
Dividends
- Paid out dividends to shareholders amounting to $10,810, reducing Cash and increasing Dividends.
Account Definitions
- An Account is an individual record for tracking specific asset, liability, and stockholder’s equity changes.
- Asset accounts increase with Debits and decrease with Credits.
- Liability accounts decrease with Debits and increase with Credits.
- Common Stock account operates similarly to liability accounts with Credits increasing and Debits decreasing.
Balances in Accounts
- Accounts Receivable, Cash, and Dividends have a Debit balance.
- Accounts Payable, Service Revenue, and Common Stock have a Credit balance.
- Expenses, including Salaries and Wages, maintain a Debit balance.
Ledger and Posting
- A Ledger is a complete set of accounts kept by a company.
- Posting refers to transferring journal entries into individual ledger accounts.
Journal Entries and Documentation
- The Journal records debit and credit effects of transactions.
- A Trial Balance lists accounts and their respective balances at a specific date.
- Each transaction must have a Source Document as proof of occurrence.
Normal Account Balance
- The normal balance indicates the side that predominantly increases an account.
- Revenue accounts typically exhibit a credit normal balance.
Assistant Hires
- Hiring a secretary does not create an immediate accounting entry until payment or services provided.
Cash Transactions
- Received $834 in cash for service design work, categorized as Unearned Service Revenue.
- Cash payment for office rent was $1,072, impacting Rent Expense and Cash accounts.
- Payments of salary and accounts payable demonstrate various cash flow changes impacting related accounts.
Studying That Suits You
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Description
Test your knowledge on the concepts from Wiley Plus Chapter 3 with this set of flashcards. Explore key equations related to assets, liabilities, and stockholder's equity. Perfect for students preparing for exams in accounting.
