Accounting II Review for Final

The Assets accounts are

• Cash

• Accounts Payable

• Notes Payable

• Inventory

Close Drawing account entry

• Dr. Capital

• Cr. Drawing Account

• Dr. Drawing Account

• Cr. Capital

A formal financial statement

• Balance Sheet

• Income Statement

• Cash Flow Statement

• Statement of Changes in Equity

Interest

• Money paid for use of money

• A type of investment

• A fee for borrowing a book

• A tax on savings

Salvage value is

• The value an asset is expected to have at the end of its useful life

• The initial cost of an asset before depreciation

• The total cost incurred to maintain an asset during its useful life

• The market value of an asset at the time of purchase

Liability Accounts are

• Accounts Receivable

• Notes Payable

• Inventory

• Cash

Journal Entry:

Purchased Prepaid Insurance

• Dr: Prepaid Insurance

  Cr: Cash

• Dr: Cash

  Cr: Prepaid Insurance

• Dr: Insurance Expense

  Cr: Cash

• Dr: Prepaid Insurance

  Cr: Accounts Payable

Journal Entry:

Expense Prepaid Asset

• Dr: Expense

• Cr: Prepaid Asst

• Dr: Prepaid Asst

• Cr: Expense

Journal Entry:

Record freight charges payment

• Dr: Freight-In

  Cr: Cash

• Dr: Cash

  Cr: Freight-Out

• Dr: Freight-Out

  Cr: Accounts Payable

• Dr: Inventory

  Cr: Freight-In

Working Capital is

• A measure of a company's long-term investments

• The fundamental measure of a company to meet current obligations and represents margin of security for short term creditors

• A calculation of total assets minus total liabilities

• The amount of cash a company has on hand for immediate expenses