Exam 1 Study Guide(8 pages)
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Exam 1 Study Guide
- Study Guide
- Miami University, Oxford
- Acc 221 - Intro to Financial Accounting
Unformatted text preview:
Exam # 1 Study Guide Lectures: 1 - 12 Lecture 1 (January 26) - Introduction to assets, liability, and owner’s equity What are the tree types of accounts, and how do they work? Assets – owned by the company, may include cash, equipment, supplies and inventory Dr. increases, Cr. Decreases account balances Liabilities – claims that non-owners have to the assets Dr. decreases, Cr. Increases account balances Owner’s equity – claims that owners have to the assets Dr. decreases, Cr. Increases account balances Accounting formula: Assets = liabilities + owner’s equity Total assets must always equal total liabilities + total owner’s equity What is the general ledger? The general ledger lists all individual transactions; trial balance equals the ending balances for each account Only positive numbers listed in the general ledger, Dr. always left side, Cr. Always right side Lecture 2 (January 28) - Getting to know the accounting system What are the steps for the accounting system? General journal, general ledger, trial balance, balance sheet Make sure everything is in balance Accounts are in balance, but not always correct It is always possible to enter a wrong number, enter something at the wrong time, forget an entry, put the entry into the wrong claims account or make an entry backwards (Dr. where you should Cr.) What is the common stock account? This represents the owner’s claim to assets. They are only used with corporations, as it s is made up of the investors who have bought shares of stock within the company. These individuals do not have direct access to the money. What is the General Journal? The general journal lists all accounts in date-order, and runs from the beginning to end of the accounting cycle. This includes the date, accounts affected, debits, credits, and a transaction description. These post directly into the general ledger. Lecture 3 (January 30) - Additional facts about accounting system What do the asset, liability, and owner’s equity accounts include? Assets Cash, inventory, supplies, equipment Liabilities Notes payable, interest ACC 221 1st Edition Owner’s equity Common stock, retained earnings Entries do not have to affect both sides of the account to stay in balance. An example of this is when the business uses cash to purchase additional inventory. This transaction would only affect the assets, yet the accounts still remain in balance. The accounting cycle has no set time constraints; it may last less than a month, a month, quarterly, annually, or any amount of time. Lecture 4 (February 2) - The Accounting System What are some of the basic entries for the accounting system? Sale of inventory to a customer Dr. Cash, Cr. Retained earnings Dr. retained earnings, Cr. Inventory Paying rent Dr. retained earnings, Cr. Cash Paying wages Dr. retained Earnings, Cr. Cash Making a sale on credit Dr. accounts receivable, Cr. Retained earnings Dr. retained earnings, Cr. Inventory Collecting cash for accounts receivable Dr. Cash, Cr. Accounts Receivable Pay interest to the bank Even if you don’t pay until the following ...
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