AFM 191 - Chp 2.2 - organizing data + generating reports

Question 1

define an account in the context of an AIS

Answer 1

keeps track of all the accumulated transactions of a specific nature

Question 2

Define “on account”

Answer 2

a purchase made today that doesn’t need to be paid for until later

Question 3

Define a chart of accounts

Answer 3

compiled record of all the accounts used by a business - temporary + permanent

Question 4

define a temporary account

Answer 4

closed or “zeroed out” at the end of the fiscal year and start with a balance of zero in the following fiscal year

Question 5

define permanent account

Answer 5

whose balances carry forward in to the following fiscal year

Question 6

what are the accounts that make up the income statement plus the dividend account

Answer 6

temporary accounts

Question 7

define a general ledger (G/L)

Answer 7

stores all transactions/journal entries that occur in an account

Question 8

define a subledger

Answer 8

subset of a general ledger - assigned in a way that makes record keeping more manageable, efficient, and effective

Question 9

what’s the use of an “accounts receivable - miscellaneous” in the ESI COA

Answer 9

An account within the ledger - the balance in that account would not be the sum of all the subledger accounts - this type of account is typically used for error correction and one-off transactions that don’t warrant the creation of a separate subledger.

Question 10

define a trial balance

Answer 10

point-in-time summary of all the balances of every general ledger account the company uses

Question 11

characteristics of a trial balance

Answer 11

1. temporary accounts start with and end with a balance of zero at each start and end of a fiscal year
2. balance for accounts that belong on the balance sheet will be “as at” the date of the trial balance, whereas income statement accounts will have cumulative balance “for the period” captured by the trial balance
3. it is a report that is used for internal and external reporting purposes, though typically as a stepping-stone for other, more complex records

Question 12

on the general ledger please - note the accounts (100, 200, 300, 400, 500)

Answer 12

100 - asset
200 - liability
300 - equity
400 - revenue
500 - expense

Question 13

which accounts on the general ledger have subledgers - in this course?

Answer 13

accounts receivables, accounts payables and inventory