A Review Of All Chapters Flashcards
accounts that increase on Dr side
assets, COGS, drawings, expenses, sales returns, sales allowances, and sales discounts.
accounts that increase through the Cr side
liabilities, capital, revenue, sales revenue, purchase return and allowence, purchase discount.
how do you close temporary accounts
you close all revenue and expense accounts using income summery. you close income summary account with owner equity.
Cogs formula
starting inventory + purchases - ending inventory
multistep income statement formula
sales - cogs = gross profit - operating expenses + outside revenue - outside losses/ expenses = net income
is depreciaction expense included in the income statement
Depreciation expense is not included in the income statement because the accumulated depreciation is used instead.
balance sheet formula
assets = liability + owner equity
what is the difference between periodic and perpetual recording methods when recording sales and purchase transactions.
when a perpetual accounting system is used inventory and cost of goods are constantly updated after every transaction. But when a periodic inventory system cost of goods and the inventory are updated at a certain date.
what is receivable scheduling?
a list of people you are supposed to receive money from and the outstanding balance they owe you.
how do you prepare bank reconciliation
1) adjust bank balance to match adjusted balance, include deposits in transit, outstanding checks, and bank errors. 2) The second step is to balance the book side subtract bank fees that were incurred like overdrawing, stop payment order fee, check printing charges, then add interest earned and notes payable collected.3) the third step is to check both accounts to see if they match if they don’t match repeat the whole process. if the numbers do match then proceed to make adjusting entry in the ledger.
what are the two methods for determining bad debt?
through the balance sheet or the income statement.
what is payable scheduling?
A list of people you owe money to and the outstanding balance you owe them.
what is an NSF check?
a NSF check is a check that is not honored because the checking account associated with that check does not have enough funds.
what must be included in the bank balance during reconciliation.
deposits in transit, outstanding checks, bank errors
what must be included in the book balance during reconciliation
bank fees, overdrawing, stop payment order fee, printing charges, interest earned, and notes payable collected..
