ACIS Test 2

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ACIS Test 2
2014-09-19 12:48:26

ACIS Test 2
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  1. The accounting cycle: Daily
    • Analyze business transactions
    • Record the transaction with a ¬†journal entry
    • Post the journal entries to ledger accounts
  2. The accounting Cycle: monthly
    • Prepare a trial balance
    • Journalize and post adjusting entires: Deferral/accurals
    • Prepare financial statements
  3. The accounting cycle: End of year
    • Journalize and post closing entries
    • Prepare a post-closing trial balance
  4. What is a transaction
    • A transaction is an economic event that must be recorded
    • -affects assets, liabilities or stockholders' equity in some way
  5. Journal Entries must include
    • Date
    • Debit entries are listed first
    • Credit entries are listed below the debits and indented
    • The amounts are recorded in debit (left) and credit (right) columns
    • A brief explanation of the transaction given
  6. Why record transactions in journals
    • Shows the complete transaction
    • Created a chronological list of all transactions
    • Allows you to make sure debit entries = credit entries
  7. Posting the journal entry transaction to the ledger
    • Journal entries were recorded in chronological order¬†
    • Now you have to re arange the entries so that they are grouped by account
  8. Account
    An individual accounting record of increases and decreases in a specific asset, liability, stockholders' equity, revenue or expense item
  9. Periodicity
    Business activity is measured over a specified period of time; month quarter or year. Most businesses measure activity on a monthly basis
  10. Revenue recognition principle
    Revenue is recognized when earned
  11. Debits and credits: Assets
    Debits increase assets credits decrease
  12. Credit Debits liabilities
    Debits decrease liabilities credits increase
  13. credit and debit Stockholders' equity
    Credit decrease stockholders' equity debit increase
  14. Credit and debit Common stock
    Debit decreases credit increases
  15. Debit and credit Retained earnings
    Debit decreases credit increases
  16. Debit and credit expenses
    debit increases expenses decreases
  17. debit and credit Revenues
    debit decreases credit increases
  18. Revenue recognition principle
    Revenue is recognized when earned
  19. Expense recognition principle
    Expenses are recognized when the associated revenue is recognized
  20. Deferral adjusting entries
    • A cash transaction has occured, the cash account is affected and the other part of the transaction is recorded on the balance sheet
    • Always involves converting an asset to an expense or a liability to a revenue
    • -Prepaid expenses
    • -Supplies
    • -Depreciation
    • -Unearned revenues
  21. Accural adjusting entries
    • An expense has been incurred or revenue has been earned but no cash has been paid out or received yet
    • Always involves recognizing an expense and a liability or recognizing revenue and an asset
    • -Accured expenses
    • -Accured wages
    • -Accured interest
    • -Accured revenue
  22. Rules of thumb for any adjusting entry
    • -Never involve cash
    • -Always include one balance sheet account and one income statement account