Accounting Made Simple Quotes

“For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits increase asset accounts and decrease equity and liability accounts. Credits decrease asset accounts and increase equity and liability accounts. Debits increase expense accounts, while credits increase revenue accounts.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Intangible assets are real, identifiable assets that are not physical objects.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Accumulated Depreciation is what’s known as a “contra account,” or more specifically, a “contra-asset account.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“A trial balance is simply a list indicating the balances of every single general ledger account at a given point in time.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Interest or dividends received from investments, and”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“the goal of GAAP is to ensure that companies’ financial statements are prepared using a consistent set of rules and assumptions so that they can be compared to those of another company in a meaningful way.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Prepaid Rent is an asset account. Over the course of the three months, the $4,500 will be eliminated as the expense is recorded. Assets caused by the prepayment of an expense are known, understandably, as “prepaid expense accounts.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Interest Expense   150          Interest Payable                150”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“time. The trial balance is typically prepared at the end of a period, prior to preparing the primary financial statements. The purpose of the trial balance is to check that debits—in total—are equal to the total amount of credits. If debits do not equal credits, you know that an erroneous journal entry must have been posted. While a trial balance is a helpful check, it’s far from perfect, as there are numerous types of errors that a trial balance doesn’t catch. (For example, a trial balance wouldn’t alert you if the wrong asset account had been debited for a given transaction, as the error wouldn’t throw off the total amount of debits.) Chapter 8 Simple Summary For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The cash flow statement also differs from the income statement in that it shows many transactions that would not appear on the income statement.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“all cash inflows or outflows are separated into one of three categories: Cash flow from operating activities,  Cash flow from investing activities, and  Cash flow from financing activities. ”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“dividends are not an expense. Therefore,”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“First, there are often differences in timing between when an income or expense item is recorded and when the cash actually comes in or goes out the door. We’ll”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The statement of retained earnings acts as a bridge between the income statement and the balance sheet. It takes information from the income statement, and it provides information to the balance sheet.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Assets = Liabilities + Owners’ Equity”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Dividends: Not an Expense!”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The statement of retained earnings functions much like a bridge between the income statement and the balance sheet. It takes information from the income statement, and it provides information to the balance sheet.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“accrual method of accounting, revenue is recorded as soon as services are provided or goods are delivered, regardless of when cash is received.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The difference between quick ratio and current ratio is that the calculation of quick ratio excludes inventory balances.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Liquidity ratios are used to determine how easily a company will be able to meet its short-term financial obligations.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“XYZ Consulting takes out a loan with its bank. The loan will not appear on the income statement, as the transaction is neither a revenue item nor an expense item. It is simply an increase of an asset (Cash) and a liability (Notes Payable). However, because it’s a cash inflow, the loan will appear on the cash flow statement.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“These financial statements are compiled using information found in the general ledger, which is, essentially, the collection of all of a business’s journal entries.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“inventory-valuation method is used. The three most-used methods are known as FIFO, LIFO, and Average Cost. Under GAAP, a business can use any of the three.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“(Gains work like revenue in that they have credit balances and increase owners’ equity.)”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The benefit of the additional accounting accuracy is far outweighed by the hassle involved in making insignificant depreciation journal entries year after year.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“the goal of the accrual method is to record the revenues or expenses in the period during which the real economic transaction occurs (as opposed to the period in which cash is exchanged).”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Whenever an expense is recorded prior to its being paid for—such as in the above entry—the”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“An easy way to keep everything straight is to think of “debit” as meaning “left,” and “credit” as meaning “right.” In other words, debits increase accounts on the left side of the accounting equation, and credits increase accounts on the right side. Also, this helps you to remember that the debit half of a journal entry is on the left, while the credit half is indented to the right.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“This transaction could be recorded as a journal entry as follows: DR. Equipment   40,000          CR. Cash            40,000 As you can see, when recording a journal entry, the account that is debited is listed first, and the account that is credited is listed second, with an indentation to the right.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“debit (or credit) to an account may increase it or decrease it, depending upon what type of account it is: A debit entry will increase an asset account, and it will decrease a liability or owners’ equity account.          A credit entry will decrease an asset account, and it will increase a liability or owners’ equity account.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less