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abifulco
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debit and credit
- debit = left
- credit = right
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double-entry accounting system
credits = debits
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assets =
liabilities + stockholder's equity (CS + Rev - Divd + rev - Exp)
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first 5 steps in accounting cycle
- 1. analysis of transactions and selected other events/identification and measurement of transactions
- 2. journalization
- 3. posting
- 4. trial balance preparation
- 5. adjustments
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last 5 steps in accounting cycle
- 6. adjust trial balance
- 7. statement preparation
- 8. closing
- 9. post-closing trial balance (optional)
- 10. reversing entries (optional)
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temporary accounts
revenues, expenses, dividends
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permanent accounts
assets, liabilities, stockholders' equity (common stock and retained earnings)
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in closing nominal accounts:
in closing temporary accounts
- reduces the balance of nominal
- accounts to zero
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prepaid expense
expenses paid in cash and recorded as assets before they are used or consumed
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unearned revenues
revenues received in cash and recorded as liabilities before they are earned
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supplies used is? supplies used to run business is?
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revenues result in a ? to a liability account and a ? to a revenue account
- 1. debit (decrease)
- 2. credit (increase)
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book value
cost - accumulated depreciation
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accrued revenue
revenues earned but not yet received in cash or recorded
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accrued expenses
expenses incurred but not yet paid in cash or recorded
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