If a transaction is properly analyzed and recorded, the total amount debited will equal the total amount credited.

Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until they are consumed or used and become an expense.

After closing entries are posted, the revenue and expense accounts will have zero balances.

Closing the revenue and expense accounts transfers the results of operations to owner's equity.

Cash purchases of merchandise are not usually recorded in the purchases journal.

The credit terms 2/10, n/30 allow the customer to take a 2 percent discount if payment is made within 30 days.

The sales journal is usually used for recording both cash sales and credit sales.

On a bank reconciliation statement, outstanding checks are shown as a deduction from the book balance.

The Sale Returns and Allowances account normally has a debit balance.

A General Ledger Control Account is an account in the general ledger that summarizes the balances of a subsidiary ledger.

The Sales Journal is usually only used for recording the sale of merchandise or services on account.

The Purchases Account is a revenue account used for recording the sale of merchandise.

To calculate the cost of goods sold, it is necessary to subtract the ending inventory from the total merchandise available for sale.

The contra asset account Allowance for Doubtful Accounts is deducted from Accounts Receivable in the Assets section of the balance sheet.

Equipment is an example of a current asset.

Gross profit on sales is calculated by subtracting cost of goods sold from net sales.

The amount of social security tax withheld depends on an employee's gross earnings, marital status, and number of withholding allowances.

The employee's marital status is one factor that determines the amount of federal income tax withheld by the employer.

Employees submit Form W-2 to their employers to show the number of withholding allowances they claim for federal income tax withholding purposes.

A physical inventory should be taken at least annually to verify the goods on hand.