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Terms in this set (16)
Property (asset) =
Financial Interest (Creditors and Owners)
Assets (The property a business owns) = Liabilities (Debts) + owner's equity (owner's financial interest in the business.
Recording transactions in the General Journal
1. Analyze the financial event:
Identify the accounts affected
Classify the accounts affected
Determine the amount of increase or decrease for each
2. Apply the rules of debit and credit
Which account is debited? For what amount?
Which account is credited? For what amount?
3. Make the entry in T-account form
4. Record the complete entry in general journal form
current ratio = current assets / current liabilities
gross profit = net sales - cost of goods sold
gross profit percentage = gross profit / net sales
inventory turnover = cost of goods sold / average inventory
net income = total revenue - total expenses
equity = owner's capital - owner's withdrawals + revenue - expenses
The rent paid for future months is an
The balance sheet shows each of the following
amount and types of property the business owns
amount owed to creditors
The ending capital balance appears on which of the following statement(s)?
Statement of owner's equity and balance sheet
A firm paid cash to apply against a debt. To record this transaction, the accountant would
debit Accounts Payable and credit Cash.
Which of the following groups contain only accounts that normally have credit balances?
Fees Income and John Smith, Capital
The financial statement that is prepared first is
the income statement
The balance sheet shows
the financial position of a business at a given time
A business purchases supplies on account. The journal entry to record this transaction is
Debit Supplies; Credit Accounts Payable
Debits are used to record
increases in assets
When an entry is made in the general journal
the accounts to be credited should be indented
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