Chapter 2 Flashcards
1
Q
Define permanent account.
A
Represent the basic position elements of the accounting equation
2
Q
Define temporary account.
A
Keeps track of the changes in retained earnings component of shareholder’s equity
Ex
3
Q
What are examples of a permanent account?
A
Assets, Liabilities, Equity
4
Q
What are examples of temporary account?
A
Revenue, gains, losses
5
Q
What is the equation for RE?
A
RE = net income - dividends
6
Q
Which accounts are debit to increase and credit to decrease?
A
Assets, losses, expenses, dividends
7
Q
Which accounts are debit to decrease and credit to increase?
A
Liabilities, equity (common stock, retained earnings, and capital), revenue, gains
