The financial statement that summarizes the changes in the retained earnings account is called the balance sheet.

A partnership:

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

The heading on every financial statement lists the three W’s—Who (the name of the business); What (the name of the statement); and Where (the organization’s address).

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business’s source documents.

Sparta Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Sparta Company’s net sales equals:

Sing Sing Company reported Cost of goods sold of $835,000 and ending Inventory of $41,750. The Days’ sales in inventory (rounded to whole days) is:

An advantage of common-size statements is that they reflect the dollar magnitude (size) of the different companies under analysis.

The purpose of reversing entries is to:

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.