5110 quiz 3

What is step 1 of the Accounting Cycle

Record transactions in the journal. Writing what happens.

What is step 2 of the Accounting Cycle

Post those transactions to the general ledger- move debits and credits to their own accounts. Moving from journal entries to the accounts.

What is step 3 of the Accounting Cycle

Prepare the unadjusted trail balance (TB 1)- every account, debit/credit, and how much is in each. Making sure your debits=credits

What is step 4 of the Accounting Cycle

Adjusting entries- either because theres a mistake or we need to record some more things that weren’t recorded in our normal process. Interest

What is step 5 of the Accounting Cycle

Prepare adjusted trail balance (TB 2)

What is step 6 of the Accounting Cycle

Prepare financial statements

What is step 7 of the Accounting Cycle

Close temporary accounts 

What is step 8 of the Accounting Cycle

Prepare a post-closing trial balance (TB 3)

What does the cash flow statement say about the accounting equation?

Assets. Focuses on cash which shows changes in the assets

What does the balance sheet show about the accounting equation?

Shows the entire thing. Assets=Liabilities + OE

What does the income statement say about the accounting equation?

Shows OE

Company issues 100 shares of stock for $5,000. Shares have a par value of $1

debit cash for 5000

credit common stock 100

credit additional paid in capital 4900

Company pays $800 in dividends

debit retained earnings

credit cash

Company owes 2800 for a computer. Seller agrees to accept 2000 which the company pays

Debit accounts payable 2800

Credit Cash 2000

Credit Gain for 800

Company sells $250 of inventory for $800 cash

Debit Cash 800

Debit COGS 250

Credit Revenue 800

Credit Inventory 250

Company has used one month of internet services they previously paid 12000 for a full year of coverage.

debit internet expense 1000

credit prepaid internet 1000

Company owes bank 5800 for interest on a loan and nothing has been recorded.

debit interest expense

credit accrued interest

Company owes bank 5800 for interest on a loan. They pay the bank 6000 to cover the interest and the 200 owed for the current month.

debit accrued interest 5800

debit interest expense 200

credit cash 6000

Company starts a consulting project on January 1 that will go for 3 months

Company will charge $3,000 total for the project and customer pays the entire $3,000 on February 1. What is the journal entry on Feb 1

debit cash 3000

credit unearned revenue 2000

credit revenue 1000