| Formatting Rules | Definitions of Key Terms | True or False | Scenarios | Miscellaneous |
|---|---|---|---|---|
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Who
What When
On a balance sheet, what do you include in the title?
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A Statement showing the financial position of an individual, company, or other organization on a certain date
What is a balance sheet?
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True
True or False
The normal balance for contra asset accounts is credit. |
Accounts Receivable
ABC Co. performed services for Client Kay in December and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January ABC received the $4,000 from Kay. In January ABC will debit Cash since cash was received. What account should ABC credit in the January entry?
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- Left side = Right side
- A = L + OE
What is the balancing equation?
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- First thing in the column
- Final total
Where on a balance sheet do you include dollar signs?
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How easily assets can be converted into cash.
What does liquidity mean?
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False
True or False
When the accrual basis of accounting is applied, adjusting entries are not necessary. |
Increase Owner's (Stockholders') Equity by $3,500
ABC Co. follows the accrual basis of accounting and performs a service on account (on credit) in December. The service was billed at the agreed upon amount of $3,500. ABC Co. debited Accounts Receivable for $3,500 and credited Service Revenue for $3,500. The effect of this entry on the balance sheet of ABC is to increase assets by $3,500 and to...?
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Owner's/Stockholders' Equity Decreases
When an owner draws $5,000 from a sole proprietorship or when a corporation declares and pays a $5,000 dividend, the asset Cash decreases by $5,000. What is the other effect on the balance sheet?
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Maturity (shortest to longest)
What is the order of liabilities based on?
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- Debtor: A person or company that owes the business money.
- Creditor: A person or company to whom money is owed.
What are debtors and creditors?
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True
True or False
Accumulated depreciation is an example of a contra asset account and its balance is deducted from the related asset in the classified balance sheet. |
Liabilities Increased
ABC Co. incurs a cleanup expense of $500 on December 30. The supplier's invoice states that the $500 is due by January 10 and ABC will pay the invoice on January 9. ABC follows the accrual basis of accounting and its accounting year ends on December 31. What is the effect of the cleanup service on the December balance sheet of ABC?
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Statement of Financial Positions
Another name for the balance sheet is...?
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- Single & Double
- Single shows a calculation being made - Double shows the final total
What two types of underlines are included in a balance sheet and what do they represent?
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These are assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.
What are fixed assets?
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False
True or False
Adjustments for accrued expenses are not necessary to record. the obligations that exist at the balance sheet date and to recognize the expenses that are not applicable to the current accounting period. |
No Liability
On December 1, ABC Co. hired Juanita Perez to begin working on January 2 at a monthly salary of $4,000. ABC's balance sheet of December 31 will show a liability of what amount?
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- Create a balance sheet to include adjustments and contra accounts
What is the purpose of a classified balance sheet?
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A balance sheet summarizes a company's financial position as of a certain date, typically at the end of a fiscal quarter or year.
Classified balance sheets represent a more polished, finished product than unclassified balance sheets. Classified balance sheets categorize assets and liabilities as either short-term or long-term, and provide subtotals for each category.
What is the difference between a balance sheet and a classified balance sheet?
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A contra account is a general ledger account with a balance that is opposite of the normal balance for that account classification. The use of a contra account allows a company to report the original amount and also report a reduction so that the net amount will also be reported.
What is a contra account?
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False
True or False
Declining balance depreciation is the allocation of the cost of a long-lived asset to expense, over its useful life, in a random manner |
(a) Total Assets $320,000
(b) Total Liabilities $90,000 (c) Stockholder's Equity $600,000
Use the basic accounting equation to answer these questions.
(a) The liabilities of Jantz Company are $90,000 and the stockholders' equity is $230,000. What is the amount of Jantz Company's total assets? (b) The total assets of Foley Company are $170,000 and its stockholders' equity is $80,000. What is the amount of its total liabilities? (c) The total assets of Sundberg Co. are $800,000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Sundberg Co.'s stockholders' equity? |
$10,000 decrease
The accounting equation: Assets = Liabilities + Stockholders' Equity, can be used to determine the answer. Therefore, change in assets = ($15,000) + $5,000 = ($10,000)
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
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