Accounting I Review for Final

Journal entry for receiving cash from a customer.

• Dr: Cash

  Cr: Accounts Payable

• Dr: Cash

  Cr: Sales Revenue

• Dr: Cash

  Cr: Accounts Receivable

• Dr: Cash

  Cr: Service Revenue

Purpose of Depreciation in accounting.

• To increase the value of an asset over time.

• To allocate the cost of a tangible asset over its useful life.

• To eliminate the asset from the balance sheet immediately.

• To record the asset's market value at the end of its useful life.

Journal Entry:

Purchased Equipment for Cash

• Dr: Equipment

  Cr: Cash

• Dr: Cash

  Cr: Equipment

• Dr: Equipment Expense

  Cr: Cash

• Dr: Cash

  Cr: Equipment Expense

Understand the difference between a book and a statement.

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

• A book is a physical object, while a statement is digital.

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

• A book is used for fiction, while a statement is used for non-fiction.

Definition of Double-Entry Accounting.

• A system where every transaction affects at least two accounts, maintaining the accounting equation.

• A method of accounting that only records cash transactions.

• A system that allows for the tracking of only one account at a time.

• An accounting method that does not require balancing the books.

Components of the Income Statement.

• Revenue, expenses, and net income

• Assets, liabilities, and equity

• Cash flow, investments, and dividends

• Sales, cost of goods sold, and gross profit

Impact of a net loss on Owner’s Equity

• A net loss increases the owner’s equity, enhancing the capital account balance.

• A net loss has no effect on the owner’s equity.

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

• A net loss temporarily suspends the owner’s equity.

Method that assumes 360 Days

• Banker's Method

• Standard Method

• Annualized Method

• Simple Interest Method

Journal entry for paying salaries.

• Dr: Salaries Expense

  Cr: Cash

• Dr: Cash

  Cr: Salaries Expense

• Dr: Salaries Payable

  Cr: Cash

• Dr: Salaries Expense

  Cr: Accounts Payable

Purpose of Financial Ratios in analysis.

• To evaluate a company's financial performance and compare it with industry standards.

• To determine the market value of a company's stock.

• To assess the effectiveness of a company's marketing strategy.

• To analyze the historical trends of a company's sales.