AccountingIStudyGuide–FinalExam.docVIP

Accounting I Study Guide – Midterm Exam Chapter 1 – The Accounting Equation: Assets = Liabilities + Owner’s Equity Assets = All things owned Liabilities = All things owed Owner’s Equity = Value of claims against assets Types of Assets: Cash Supplies Accounts Receivable Prepaid Insurance Notes Receivable Types of Liabilities: Accounts Payable Notes Payable Sales Tax Payable Types of Owner’s Equity: Capital Types of Contra Owner’s Equity: Drawing Chapter 2 – Using T Accounts Normal Account Balances: Debit Credit Assets Contra Assets Liabilities Drawing Owner’s Equity Expenses Sales discounts Revenue/Income(sales) Sales returns allowances “Net Loss” “Net Income” Purchases Purchases Discount Purchases Returns Allowances Chapter 3 – General Journal/Source Documents Cash Payments – check Cash Sales – invoice Sales on Account – Sales invoice Cash Received – receipt Investment/withdrawal by owner – memorandum Total Cash Sales – Cash register tape Objective Evidence Accounting Concept - An entry cannot be recorded unless there is a sources document since the sources document proves the transaction occurred. Correcting Errors while recording transaction in the General Journal: Errors should be corrected so there is no doubt as to what the correct entry should have been. If one item in the entry is incorrect, draw a line through the incorrect item and write the correct item above the line. If the entire entry is incorrect, draw a line through the entire entry and then record the correct entry on the blank journal lines immediately below the incorrect entry. If there are correct entries already recorded below the incorrect entry, draw lines through all the incorrect items and record the correct information directly above the line. Chapter 4 – Posting from a General Journal to a General Ledger A group of accounts is a ledger A ledger that contains all accounts needed to prepare financial statements is a general ledger Char