Catalog / Accounting & Bookkeeping Cheat Sheet
Accounting & Bookkeeping Cheat Sheet
A comprehensive cheat sheet for accounting and bookkeeping principles, covering key concepts, formulas, and best practices. Designed to be a quick reference for students, professionals, and small business owners.
Fundamental Accounting Principles
Basic Accounting Equation
Assets = Liabilities + Equity This equation is the foundation of double-entry accounting. It ensures that the balance sheet always balances. |
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Key Accounting Principles
Accrual Accounting |
Recognize revenues when earned and expenses when incurred, regardless of when cash changes hands. |
Matching Principle |
Match expenses with the revenues they helped generate in the same accounting period. |
Going Concern |
Assume the business will continue operating in the foreseeable future. |
Conservatism |
Recognize losses when probable and only recognize gains when realized. |
Consistency |
Use the same accounting methods from period to period to allow for comparability. |
Materiality |
Only disclose information that is significant enough to influence the decisions of users of financial statements. |
Double-Entry Bookkeeping
Every transaction affects at least two accounts. Debits increase asset, expense, and dividend accounts, while credits increase liability, equity, and revenue accounts. The total debits must always equal the total credits. |
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Financial Statements
Income Statement
Reports a company’s financial performance over a period of time. Format: |
Key Items:
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Balance Sheet
Presents a company’s assets, liabilities, and equity at a specific point in time. Format: |
Key Items:
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Statement of Cash Flows
Summarizes the movement of cash both into and out of a company. It is split into three main activities. |
Operating Activities: Cash flows from the normal day-to-day running of the business. |
Format: |
Statement of Retained Earnings
Shows the changes in retained earnings over a period of time. Retained earnings is the accumulated profits of the business less any dividends paid out. |
Format: |
Journal Entries and Ledgers
Common Journal Entries
Service Revenue |
Debit: Cash |
Purchase of Supplies on Credit |
Debit: Supplies |
Payment of Rent |
Debit: Rent Expense |
Depreciation Expense |
Debit: Depreciation Expense |
Salaries Expense |
Debit: Salaries Expense |
Inventory Purchase |
Debit: Inventory |
The General Ledger
The general ledger is a record of all the business’s transactions. It holds all the debit and credit entries. The information in the ledger is then used to create the financial statements. |
It is usually organised by account, showing the increases and decreases to each account. |
Chart of Accounts
A list of all the accounts used by a business. It is organized by category (assets, liabilities, equity, revenue, expenses). |
It’s important to have a well-organized chart of accounts to ensure accurate financial reporting. |
Accounting Ratios and Analysis
Liquidity Ratios
Current Ratio |
Current Assets / Current Liabilities |
Quick Ratio (Acid-Test Ratio) |
(Current Assets - Inventory) / Current Liabilities |
Cash Ratio |
(Cash + Marketable Securities) / Current Liabilities |
Profitability Ratios
Gross Profit Margin |
(Revenue - Cost of Goods Sold) / Revenue |
Net Profit Margin |
Net Income / Revenue |
Return on Equity (ROE) |
Net Income / Average Stockholders’ Equity |
Return on Assets (ROA) |
Net Income / Average Total Assets |
Solvency Ratios
Debt-to-Equity Ratio |
Total Debt / Total Equity |
Times Interest Earned Ratio |
EBIT / Interest Expense |