Accounting Equation (Q&A)

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1. What is owner's equity?
2. What is the double-entry system?
3. What are accrued expenses and when are they recorded?
4. What is equity in accounting?
5. What is a liability?
6. What is retained earnings?
7. What entry is made when selling a fixed asset?
8. Where does revenue received in advance go on a balance sheet?
9. What is a balance sheet and why is it prepared?
10. What is the statement of financial position?
11. How do cash dividends affect the financial statements?
12. How are the balance sheet and income statement connected?
13. Why are expenses debited?
14. How do you record an owner's money that is used to start a company?
15. How do you report a write-down in inventory?
16. What is the meaning of debtor?
17. What are income statement accounts?
18. What is a temporary account?
19. What is the difference between cost and expense?
20. What is a capital account?
21. What is the expanded accounting equation?
22. Why are revenues credited?
23. What is stockholders' equity?
24. What is the accounting equation?
25. Would you please explain unearned income?
26. What are the effects of depreciation?
27. What does overstated mean?
28. What is a customer deposit?
29. What is meant by owner's draws?
30. Is sales tax an expense or a liability?
31. What is net income?
32. How does an expense affect the balance sheet?
33. Where is accrued income reported in the balance sheet?
34. Why are assets and expenses increased with a debit?
35. How, when and why do you prepare closing entries?
36. If inventory is understated at the end of the year, what is the effect on net income?
37. Is it possible for owner's equity to be a negative amount?
38. What is the accounting entry to close the sole proprietorship drawing account?
39. Why is the P&L profit entered on the credit side of the balance sheet?
40. How does the accounting equation stay in balance when the monthly rent is paid?
41. Why is Rent Expense a debit and Service Revenues a credit?
42. Is it okay to have negative amounts in the equity section of the balance sheet?
43. If a company earns a profit, which balance sheet items change?
44. What are accrued revenues and when are they recorded?
45. What is the difference between a balance sheet of a nonprofit organization and a for-profit business?
46. What does understated mean?
47. What is the entry when merchandise has been received but not the vendor's invoice?
48. What is a credit?
49. Why are sales a credit?
50. What is the book value per share of stock?
51. Will every transaction affect an income statement account and a balance sheet account?
52. A credit is not a normal balance for what accounts?
53. What are some tips to make learning debits and credits easy?
54. What does double entry mean?
55. Is contributed capital a noncurrent asset or a current asset, and is it a debit or credit?
56. Why is the accuracy of inventory valuation so important?
57. What is the bookkeeping equation?
58. In bookkeeping, why are revenues credits?
59. When will a transaction affect only one side of the accounting equation?
60. What are the stockholders' equity accounts?
61. Why does a company's profit appear as a credit on its balance sheet?
62. What is the transaction approach and balance sheet approach to measuring net income?
63. Are liabilities always a bad thing?
64. Should an owner's compensation be recorded as an expense or in the Drawing account?
65. If an accrual adjusting entry increases an expense and a liability, how does the balance sheet remain in balance?