Accounting for Services

What is the accounting equation?

• Assets = Owner's Equity + Liabilities

• Liabilities = Owner's Equity - Assets

• Owner's Equity = Liabilities - Assets

• Assets = Liabilities - Owner's Equity

What is the journal entry to record the owner's initial investment in the business?

• Debit to Cash and Credit to Capital

• Debit to Capital and Credit to Cash

• Debit to Accounts Payable and Credit to Capital

• Debit to Accounts Receivable and Credit to Accounts Payable

What is the account used in recording company's liabilities to its customers?

• Unearned Revenue

• Service Revenue

• Notes Payable

• Equipment

What is the next step after recording business transactions?

• Posting to the General Ledger

• Preparation of Unadjusted Trial Balance

• Journalizing

• Adjustments

What is the basis in preparation of Financial Statements?

• Adjusted Trial Balance

• Unadjusted Trial Balance

• General Ledger

• Closing Entries

What is the optional step in accounting cycle?

• Adjusting Entries

• Reversing Entries

• Journalizing

• General Ledger

What is the effect is the accountant fails to record an adjusting entries for the interest for the period?

• Asset is Understatement

• Liabilities is Understatement

• Owner's Equity is Understatement

• Expense is Overstatement

What is the purpose of preparing trial balance?

• To use in preparation of Financial Statements

• To verify the equality of debits and credits posted in General Ledger

• To check if the journal entry is correct

• To make sure that the adjusting entries are accurate

What is the account used to close the expense account?

• Capital

• Income Summary

• Drawings

• Revenues

What is the closing entry if the total amount of revenues exceeds the total amount of expense?

• Debit to Revenues

• Debit to Income Summary

• Debit to Capital

• Debit to Expenses