Author: Anonymous

The purpose of reversing entries is to:

If a company provides services to a customer on credit, the company providing the service should credit Accounts Receivable.

Stockholder investments are increases in equity from a company’s earnings activities.

Current assets and current liabilities are expected to be used up or come due within one year or the company’s operating cycle whichever is longer.

A contra account is an account linked with another account; it is added to that account to show the proper amount for the item recorded in the associated account.

The base amount for a common-size balance sheet is usually total assets.

Stockholder investments are increases in equity from a company’s earnings activities.

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

A debit entry is always an increase in the account.