Accounting I Review for Final

Front

Understand the difference between a book and a statement.

Back

A book records transactions, while a statement summarizes financial data.

Front

Components of the Income Statement.

Back

The Income Statement includes revenue, expenses, and net income.

Front

Definition of an accounting period.

Back

An accounting period is a time frame for summarizing financial results, such as one month, three months, six months, or twelve months.

Front

Importance of the Income Statement in business.

Back

The Income Statement provides a view of the financial health of a business.

Front

Trial Balance proves equality of ledger and asset balances.

Back

It verifies that total debits equal total credits.

Front

Temporary accounts are

Back

Revenue and Expenses.

Front

Journal Entry for closing Revenue

Back

Dr: Revenue

Cr: Summary account

Front

Net Loss Condition

Back

When Expenses are higher than Revenue

Front

Impact of a net loss on Owner’s Equity

Back

A net loss decreases the owner’s equity, reducing the capital account balance.

Front

Simple Interest Calculation method.

Back

Calculated based on a 360-day year, also known as the Banker’s Method.