ACG 2021 - Financial Accounting

Frequently Asked Questions

1. What are the four financial statements?
2. What does Accrual Accounting mean?
3. What accounts increase with a debit?
4. What accounts increase with a credit?
5. What is the basic accounting equation?
6. What accounts are listed on the balance sheet?
7. What accounts are listed on the Income Statement?
8. What is the purpose of the Statement of Owner’s Equity?
9. What is the purpose of adjusting entries?
10. What is the purpose of the closing entries?
11. What is the difference between accounting and bookkeeping?
12. What is the classification of unearned revenue?
13. What is GAAP?
14. What is the classification of accumulated depreciation?
15. What is the classification of prepaid rent and prepaid insurance?
16. What is the classification of allowance for uncollectible accounts?
17. What is the purpose of a worksheet?
18. What accounts are listed on the post closing trial balance?
19. What account would never be found in an adjusting entry?
20. What is the purpose of the trial balance?

1. What are the four financial statements?
   Income statement
   Statement of Owner’s Equity/Retained Earnings
   Balance Sheet
   Statement of Cash Flows
2. What does Accrual Accounting mean?
   Record revenues when earned and expenses when incurred regardless of cash flow
3. What accounts increase with a debit?
   Assets
   Expenses
   Withdrawals/Drawings/Dividends
4. What accounts increase with a credit?
   Liabilities
   Capital/Retained Earnings/Contributed Capital
   Revenues
   
5. What is the basic accounting equation?
   Assets = Liabilities + Owners Equity
6. What accounts are listed on the balance sheet?
   Assets
   Liabilities
   Owner’s Equity/Retained Earnings/Contributed Capita
7. What accounts are listed on the Income Statement?
   Revenues, Expenses
8. What is the purpose of the Statement of Owner’s Equity?
   To update the Owner’s Capital account (Retained Earnings)
9. What is the purpose of adjusting entries?
   To ensure account balances properly reflect results of business operation
10. What is the purpose of the closing entries?
    To transfer the temporary account balances to the Owner’s Capital account
11. What is the difference between accounting and bookkeeping?
    Bookkeeping is a procedure whereas accounting is a process
12. What is the classification of unearned revenue?
    Liability
13. What is GAAP?
    Generally Accepted Accounting Principles
14. What is the classification of accumulated depreciation?
    Contra-Asset
15. What is the classification of prepaid rent and prepaid insurance?
    Asset
16. What is the classification of allowance for uncollectible accounts?
    Contra-Asset to Accounts Receivable
17. What is the purpose of a worksheet?
    To help the accountant to get organized at the end of the accounting period and to help prepare the adjusting entries, closing entries, and financial statements
18. What accounts are listed on the post closing trial balance?
    Permanent or Real Accounts are listed on the post-closing trial balance
    Assets
    Liabilities
    Capital
19. What account would never be found in an adjusting entry?
    Cash
20. What is the purpose of the trial balance?
    To ensure the equality of debits and credits