The debits and credits recorded on your bank statement are the reverse of the debit and credits recorded in your business books.

An increase in revenues is recorded using a debit.

If you make a sale on account, you credit accounts receivable.

When you purchase a piece of equipment, you debit a fixed asset account.

A "pure" service type of business has a minimal or no inventory at all.

A manufacturing type of business has several types of inventory.

The weighted average inventory method tends to even out cost fluctuations resulting from increases and/or decreases in prices.

An accounting rule that assumes a business will continue forever is the business entity concept or rule.

A business's financial statements only record transactions that can be measured in money.

Adjusting entries are used in order to properly match revenues and expenses in a period.

Bad debt expenses, earned but not paid wages, depreciation, and inventory amounts are all example of items that might require adjusting entries.

The accrual method of accounting often results in the improper matching of revenues and expenses.

Financial analysis provides clues or indicators of financial areas that may require attention.

A cash forecast is a tool that businesses should use in order to help protect against cash shortages.

Gross Profit Margin = Gross Profit / Net Sales

The total debit balances will normally equal the total credit balances if you only sum the balances of the balance sheet accounts in the general ledger prior to closing a period.

The sum of the assets plus liabilities normally equals the balance of owner's equity.

When a business pays in advance ,such as for insurance coverage, a liability is created.

A separate record maintained for each type of asset, liability, equity, revenue, and expense that summarizes transactions is called an account.

Preparing adjusting entries at the end of a period is based on the matching concept.

If a transaction affects only one side of the accounting equation an increase and a decrease are recorded.

An amount recorded on the left side of an account is a credit.

The normal balance side of an account is the decrease side.

The left or debit side is the normal balance side for liabilities, revenue, and equity accounts.

A source document that supports a cash disburement transaction is a sales invoice.

A compond journal entry affects more than two accounts.

The buyer owns goods in transit that are shipped FOB Shipping Point.

The petty cash fund is a liability account.

A check with a blank endorsement can be cashed by anyone that possesses the check.

A check endorsed with "For Deposit Only" can be cashed by anyone that possesses the check.