Month 1 bookkeeping test (intuit)

What are assets?

Answer explanation

Assets are what the company owns/controls and expects to gain benefit from.

What are liabilities?

Answer explanation

Liabilities are what a company owes to others.

What are equities?

Answer explanation

Equities are owners stake in the company, how much they've invested or withdrawn

What is the accounting equation and why is it important?

Answer explanation

Assets = Liability + Equity OR Assets - Liability = Equity. It's important to know, because if you apply this equation to a real company and it's not correct, then you know there is a problem somewhere in the accounting.

What is double entry accounting?

Answer explanation

Double entry accounting tracks which accounts increase and which decrease for a given transaction.

What is double entry accounting?

Answer explanation

Double entry accounting tracks which accounts increase and which decrease for a given transaction. This needs to be balanced

What are debits and credits? Which side do they belong in double entry accounting?

Answer explanation

Debits go on the left, credits go on the right. Debits are Assets and expenses, credits are liabilities, equities, and revenue.

What does DEA/LER stand for?

Answer explanation

Debits: expenses, assets Credits: liabilities, equity, revenue

What is the expanded accounting equation?

Answer explanation

Assets + Expenses = Liabilities + Equity + Revenue

What is the chart of accounts?

Answer explanation

It is a list of accounts for recording and categorizing transactions in the general ledger.