1.

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33.

A sole proprietorship is a business that has a single owner who is responsible for making decisions for the company. A partnership consists of two or more individuals who share the responsibility of running the company. A corporation is one of the most recognizable business structures and has a separate identity from the owners of the company. One or more owners may participate as shareholders of a corporation. The users of financial statements include owners, present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public Accounting rule that revenue should be recorded only when the (1) revenue generation process has been substantially completed, and (2) an exchange has taken place. It is a restatement of the old maxim: Month-Period of time Day- Point of time Assets and Expenses An increase is recorded as debit (left side) A decrease is recorded as credit (right side) Liabilities, Equities and Revenues A decrease is recorded as debit (left side) An increase is recorded as credit (right side) Contra-accounts Contra-accounts behave exactly in opposite way to the respective normal accounts. Date 14. Account 15. Debit 16. Credit ADJUSTING ENTRIES Jan 31 Supplies Expense 18,480 Office Supplies 18,480 Supplies Expense = $22,800 $4,320 = $18,480 Jan 31 Rent Expense 12,000 Prepaid Rent 12,000 Rent Expense = $36,000 3 = $12,000 Jan 31 Depreciation Expense 1,100 Accumulated Depreciation 1,100 Depreciation Expense = ($80,000 $14,000) (5 12) = $1,100 Jan 31 Interest Expense 150 Interest Payable 150 Interest Expense = $20,000 (9% 12) = $150 Jan 31 Unearned Revenue 3,000 Service Revenue 3,000 JULY 31: EXPIRATION OF ONE MONTHS RENT 1,600 ANALYSIS: Expiration of prepaid rent decrease the asset account prepaid rent with a credit and increases the expense account rent expense with a debit ASSETS = LIABILITIES +STOCKHOLDERS EQUILTY PREPAID RENT RENT EXPENSE DR JULY 3 3,200 BAL 1,600 CR JULY 31 1,600 DR 1600 CR

34. 35. 36. 37.

Accounting is an information system that measures processes and communicates financial information about an economic entry? Know debit and credit rules and transaction analysis (straight out the book tranasaction) Posting is the process of copying either summary-level or detailed entries in an accounting journal into the general ledger. Journal entries provide foundational information for all other financial reports and are used by auditors to analyze how financial transactions impact a business. 38. An economic event that initiates the accounting process of recording it in a company's accounting system. 39. 40. Another basic transaction 41. Get what you started with (t account) (what you bought, what you use,what you have left) 42. Trail balance~adjusting entries (chapter 3) 43. 16. Payment received before a good is sold or a service is provided. Unearned revenue is classified as a current liability on the balance sheet until it is recognized as earned during the accounting cycle. 44. 17. matching rule 45. 18. statement of adjusting entries 46. 19. A method used for income and expenses for a particular time. 47. 20. to transfer revenue and expense accounts to retained earnings at the end of the financial period21. definition of real/perm accounts 48. 22. 23. 24 are closing entries (close account)

Revenues Income Summary Income Summary Salaries Expense Utilities Expense Rent exp. Amorizaltion exp. Income Summary Retained earnings Retained earnings dividends

dr 10,000

cr 10,000 Revenues Expenses

dr

cr 10,000

4,500

5,500 1,500 400 600 2,000 1,500 400 600 2,000 Total exp 5,500 Net Income 4,500 5,500

5,500

1,000 1,000

49. 50. 51. 52. 53. 54. 55.

25. Basic transaction for charge purchase Purchase discount 27-30 (pg 274) what is net sales what is net purchases what is cost of goods sold what is net income Net Sales First line Net purchases 5th line Cost of goods sold 14th line Net income last line