Profit = Expenses - Sales

Sole proprietorships and partnerships have unlimited liability.

Cash, Accounts Receivable, and Inventory are examples of business expenses.

The revenue realization principle or rule states that revenues should be recognized when the cash for a transaction is received.

The financial position or condition of a business as of a specific date is shown on the Income Statement.

The balance sheet is a financial statement that shows the results of a business's operations for a specific period of time (year, quarter, month).

Total assets increase when cash is received from a customer's account receivable.

Total assets increase when cash is received from a customer's account receivable.

A credit is always an increase and recorded on the right side of an account.

Transactions are initially (first) recorded in the general ledger.

The left side of an account is always the debit side.

A credit balance for a cash account indicates the bank account is overdrawn.

The cash basis of accounting is recognized as an acceptable method of accounting by generally accepted accounting principles.

Unearned revenues are also called deferred revenues.

Simplicity (ease of use) is a justification for using the cash basis of accounting.

Cash is one of the most liquid assets.

Separation of duties, when possible, is a good internal control procedure.

Depending on its balance, Cash Over and Short can be either a miscellaneous revenue account or a miscellaneous expense account.

When considering internal controls, the cost and benefits should be considered.

Accepting credit cards as a payment method is one way of possibly increasing sales.

A cash forecast normally starts with estimating sales.

Source documents provide evidence that a transaction has occurred.

The sales journal is normally used to record the sale of merchandise for cash.

The accounts receivable and the accounts payable account are control accounts.

The Allowance for Uncollectible Accounts account is a contra account.

An aging of accounts receivable report is a good tool to use as an aid for cash management.

Goods in transit that were purchased with freight terms of FOB Shipping Point should be included in the ending inventory of the buyer.

Working Capital = Current Liabilities - Current Assets

The current portion of long term debt is classified as an asset.

An account titled Unearned Fees would be classified as a revenue account.