Accounting Principles Jeopardy

A company with assets of $50,000 and liabilities of $20,000 has equity equal to this amount.

What is $30,000?

Borrowing cash from a bank increases assets and increases this element of the equation by the same amount.

What are liabilities?

Revenues increase equity, while these costs of earning revenue decrease it.

What are expenses?

This system records every transaction in at least two accounts so the equation always stays in balance.

What is double-entry bookkeeping?

A company starts the year with equity of $80,000, earns net income of $25,000 and pays $10,000 in dividends, ending with this equity.

What is $95,000?

A debit is recorded on this side of a T-account.

What is the left side?

Asset and expense accounts normally carry this kind of balance.

What is a debit balance?

Revenue and liability accounts are increased by this kind of entry.

What is a credit?

This list of every ledger account balance checks that total debits equal total credits.

What is a trial balance?

An account like Accumulated Depreciation, carrying a balance opposite to the account it is paired with, is called this.

What is a contra account?

Transactions are first recorded in this book of original entry.

What is the journal?

Transferring amounts from the journal to individual ledger accounts is called this.

What is posting?

At the end of a period, these entries reset revenue, expense and dividend accounts to zero.

What are closing entries?

Because they are zeroed out each period, revenue, expense and dividend accounts are called this kind of account.

What are temporary accounts?

This optional step, made on the first day of a new period, undoes certain accrual adjustments from the period before.

What are reversing entries?

Spreading the cost of a building over its useful life is recorded through this expense.

What is depreciation?

Insurance paid a year in advance is first recorded as this kind of asset.

What is a prepaid expense?

Cash received from a customer before the work is done is recorded as this liability.

What is unearned revenue?

This type of adjusting entry records revenue earned or expenses incurred before any cash changes hands.

What is an accrual?

Adjusting entries exist largely because of this principle, which records expenses in the same period as the revenues they help produce.

What is the matching principle?

This statement reports revenues minus expenses over a period of time.

What is the income statement?

This statement sorts cash flows into operating, investing and financing activities.

What is the statement of cash flows?

This statement links net income to the balance sheet by showing how earnings kept in the business changed.

What is the statement of retained earnings?

This income statement format reports gross profit and operating income as separate subtotals.

What is a multiple-step income statement?

Assets expected to be turned into cash or used up within a year or the operating cycle are classified as these.

What are current assets?

This principle records assets at their original purchase price.

What is the cost principle?

This assumption keeps an owner's personal transactions separate from the business's.

What is the economic entity assumption?

This assumption presumes a business will keep operating for the foreseeable future.

What is the going concern assumption?

This principle records a sale when the goods or services are delivered, not when the cash arrives.

What is the revenue recognition principle?

This constraint lets accountants skip strict treatment of amounts too small to affect a user's decisions.

What is materiality?