financial accounting exam 1

Acquired cash by issuing common stock

+debit in cash, +credit in common stock

Purchased land

-credit from cash, +debit in land

Preformed services for cash

+debit in cash, +credit in retained earnings

Preformed services on account

+debit Accounts Receivable, +credit Retained earnings

Collected cash from those "on account" customers

+debit cash, -credit accounts receivable

Collected cash from customers for services that will be preformed later

+debit cash, +credit unearned revenue

Acquired cash by borrowing from a creditor

+debit in cash, +credit in notes payable

Preformed a service from earlier

-debit unearned revenue, +credit retained earnings

Paid for expenses with cash

-credit from cash, -debit retained earnings

Incurred expenses that will be paid for later

+credit salaries payable, -debit retained earnings

Paid expenses that have been incurred

-credit cash, -debit salaries payable

Prepaid for things that will be utilized later

-credit cash, +debit prepaid rent

Recognize expenses when things are utilized

-credit prepaid rent, -debit retained earnings

Purchase items on account

+debit supplies, +credit accounts payable

Paid for the items that had been purchased "on account"

-credit cash, -debit accounts payable

Use up the items that had been purchased

-credit supplies, -debit retained earnings

Operation activities

Customer paying you, Paying employees, Paying rent/utilities/supplies

Investing Activities

Buying or selling long term assets/Equipment, Land, Buildings

Financing Activities

How the company gets or repays money. Borrowing from bank, Paying back loans, Issuing stock, Paying dividends.

Income statement

Did the company make money? Focuses on revenues earned and expenses incurred. Ignores weather cash moved yet.

Cash flow statement

Where did cash actually come from and go? Only cares about cash. 3 categories: Operating, Investing, and Financing.

Net income

Total revenues - total expenses