Questions and Answers
What is the equation for Assets?
What are the components of Liabilities?
Accounts Payable + Bonds Payable
What is the definition of Stockholder's Equity?
Common Stock + Retained Earnings
What does R/E stand for?
Signup and view all the answers
What is the cash transaction when common stock is issued for cash?
Signup and view all the answers
What is the journal entry for borrowing $43,650 by issuing bonds?
Signup and view all the answers
What is the cash entry for purchasing delivery trucks for $52,630?
Signup and view all the answers
What is the revenue recorded for services performed to customers?
Signup and view all the answers
What is the journal entry when purchasing supplies on account for $6,100?
Signup and view all the answers
What is the amount paid for rent?
Signup and view all the answers
What is the entry for performing services on account for $11,000?
Signup and view all the answers
What is the journal entry for paying salaries of $26,270?
Signup and view all the answers
An ____ is an individual accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.
Signup and view all the answers
How are asset accounts affected by debits and credits?
Signup and view all the answers
How are liability accounts affected by debits and credits?
Signup and view all the answers
What is the normal balance for an accounts receivable?
Signup and view all the answers
What balance does the cash account typically have?
Signup and view all the answers
What is the balance type for dividends?
Signup and view all the answers
What is the balance type for accounts payable?
Signup and view all the answers
What is the balance type for service revenue?
Signup and view all the answers
What is the normal balance for salaries and wages expenses?
Signup and view all the answers
What happens to cash in the transaction where common stock is issued for $19,310?
Signup and view all the answers
What is the entry for purchasing equipment for $8,660, paying part in cash?
Signup and view all the answers
How do you record services performed on account for $18,000?
Signup and view all the answers
What is the cash movement for paying salaries of $1,200?
Signup and view all the answers
What is recorded when paying $2,640 cash on balance owed for equipment?
Signup and view all the answers
What is the cash movement for paying an $810 cash dividend?
Signup and view all the answers
What is the entire group of accounts maintained by a company called?
Signup and view all the answers
What does 'posting' refer to in accounting?
Signup and view all the answers
What is the term for the side which increases an account?
Signup and view all the answers
What is the purpose of a chart of accounts?
Signup and view all the answers
What does the left side of an account represent?
Signup and view all the answers
What is a source document?
Signup and view all the answers
What shows the debit and credit effects of specific transactions?
Signup and view all the answers
What is a trial balance?
Signup and view all the answers
Which account has a credit normal balance?
Signup and view all the answers
What is recorded when stockholders invest $21,438 cash in common stock?
Signup and view all the answers
What entry is made for hiring a secretary-receptionist at a salary of $447 per week?
Signup and view all the answers
What is the entry for paying office rent of $1,072 for the month?
Signup and view all the answers
What does the transaction of purchasing architectural supplies on account for $1,548 show?
Signup and view all the answers
What happens when blueprints on a carport are completed and billed to the client for $2,263?
Signup and view all the answers
What is recorded when receiving an $834 cash advance for designing a new home?
Signup and view all the answers
What is the entry when receiving $3,335 cash for services completed?
Signup and view all the answers
What is recorded when paying $1,788 to the secretary-receptionist for the month?
Signup and view all the answers
What entry is shown for paying $357 to Burlington Company for accounts payable?
Signup and view all the answers
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
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
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.