ACCTG 201 Midterm: Accounting 201 – Study Guide 1

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To remember revenue recognition & the matching principle: earned, revenue, incurred, expenses, revenue is recorded when earned. Sight word: provided services: expenses are recorded when incurred. Revenue: inventory, prepaid expenses, cash, accounts receivable, property, land, equipment. Tire treds get reduced to zero (temporary) Measurement process: recording external transactions and posting adjusting entries. Adjust the trial balance to reflect economic reality at. Adjusted trial balance reflects snapshot of company at. Reporting process: pull amounts from adjusted trial balance onto the financial. Changes in common stock and retained earnings. Closing process: close out temporary accounts to the retained earnings account. Revenues, expenses, dividends: permanent account balances carried forward. Assets, lia(cid:271)ilities, sto(cid:272)kholde(cid:396)s" e(cid:395)uit(cid:455: post-closing trial balance. Reflects emptied temporary account balances after closing entries. Transactions related to revenues and expenses operating. Transactions with lenders and owners financing. Transactions involving the purchase and sale of productive assets investing. Partnership business owned by two or more persons. Corporation entity legally separate from its owners.

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