3. What Are the Different Exchange Transactions? Exchange Transactions

5. What is the Sequence of the Accounting Cycle? Step 1 Step 2 Step 3 Step 4

8. What Is the Accounting Equation?

9. A = L + OE Describe Effect of the Following Transactions on a Company Borrow money Invest in company Pay off a note Purchase equipment Borrow funds to settle a debt

10. What Is the Rule of Double-Entry Accounting?

12. Using a T-Account 35 12 The cash account has a beginning balance of $35. A check for $12 is written to pay for supplies. Using a T-account, what is the ending balance of the cash account? Cash 23

14. Explain How Debits and Credits Work Assets = Liabilities + Owners’ Equity

16. Draw the Expanded Accounting Equation

21. Example 1: Journal Entry Supplies purchased for $25 are purchased “on account.” Prepare the correct journal entry. What do we mean by purchased “on account?”

22. Example 2: Journal Entry A check for $100 is received in payment for services rendered. Make the correct journal entry.

23. Example 3: Journal Entry Merchandise is sold to a customer on account for $75. The cost of the product was $60. Make the journal entries.

24. Journal 1 Page 1 Date Transaction Ref. Debits Credits Jan. 1 Supplies 25 Accounts Payable 25 Purchased supplies on account. Feb. 1 Cash 101 100 Revenue 100 Received cash for services. Mar. 1 Accounts Receivable 75 Sales Revenue 75 Sold merchandise on account. Entered when posted to ledger.

27. General Ledger Date Explanation Ref. Debits Credits Balance Jan. 1 Balance 100 2 Issued 100 shares of capital stock at $10 per share GJ1 1,000 1,100 3 Purchased equipment GJ1 300 800 4 Sold inventory GJ1 60 860 5 Monthly payment on loan GJ1 230 630 6 Revenue GJ1 2,500 3,130 ACCOUNT: Cash Account No. 101

28. Chart of Accounts ASSETS (100-199): Current Assets (100-150): 101 Cash 105 Accounts Receivable 107 Inventory Long-Term Assets (151-199 ): 151 Land 152 Buildings LIABILITIES (200-299): Current Liabilities (200-219): 201 Notes Payable 202 Accounts Payable Long-Term Liabilities (220-239): 222 Mortgage Payable OWNERS’ EQUITY (300-399): 301 Capital Stock 330 Retained Earnings SALES (400-499): 400 Sales Revenue EXPENSES (500-599): 500 Cost of Goods Sold 501 Sales Salaries and Commissions 523 Rent Expense 528 Advertising Expense 573 Utilities Expense 579 Accounting and Legal Fees

30. Define The Trial Balance What is the Trial Balance used for?

31. The Example Company Trial Balance December 31, 2006 Debits Credits Cash $ 21 Accounts Receivable 15 Inventory 12 Land 200 Accounts Payable $ 30 Capital Stock 150 Retained Earnings 24 Sales Revenue 919 Cost of Goods Sold 850 Advertising Expense 10 Miscellaneous Expenses 15 ______ Total $ 1,123 $ 1,123 Sample Trial Balance

33. List Advantages of Computers

34. List Disadvantages of Computers

35. End Chapter 3