Appendix A Flashcards
Šta sve expenses mogu biti?
wages, cost of goods sold, power, rent
Šta sve income može biti?
sales, interest received(interest expense i njega debitujemo)
Šta su chart of accounts?
all the accounts that business uses
Balance
uvek je pozitivan i zavisi od toga čega više imamo
Šta znači system is self-balancing?
Total debits should equal total credits
Kako purchase of service izgleda za T-accounts?
Ukoliko plaćamo cash-om it decreases cash na credit strani ili ako plaćamo na credit it increases accounts payable na credit starni. A na debit strani it increases expenses.
Kako purchase of goods izgleda za T-accounts?
Takodje it incerases expenses na debit strani. These goods can be raw materials(used in production process) or goods to be sold. POENTA JE DA SE KORISTE IN SHORT-TERM
Šta se dogadja ako imamo purchase of goods which are intended to be used in long-term(that are not intended to be transformed or sold)?
Then we have increase in assets kao npr machines, buildings….
What does the balance on the income and expense account represents?
It represents decrease or increase in woner’s equity.
What is the convention of accounting(or reporting period)?
Operations continue over time without interupting over the year. Npr pocnu krajem godine ali se nastave i na početak sledeće.
Accural accounting principle
Principle which suggets how to recognize income and expenses in the income statement. Income and expenses are recorded when we sell our good or services and when we use our resources even if we dont have the payment and we didnt receive the money.
A transaction may involve the recognition of a liability that will be satisifed by a transfer of cash at a future date but it will be recorded at the time of initial transaction , without waiting for the flows of cash.
Cash basis accounting
potpuno suprotno od accural accounting principle-računamo kada se dobija ili plaća cash.
Expense recognition(or matching principle)
Expenses are recorded when they happen, when we used our resources, a to može biti različito i ne u isto vreme kada smo iskoristili pare.
Accured expenses(accurals)
costs that are applicable to the current accounting period but have not yet been recorded as expenses.
Prepaid expenses(prepayments)
costs that have been already recorded but relate tot the consumption in the future period
How to accure expenses?
Increase expense and incraese payables
How to recognize prepayment?
Incraese receivables and decraese expense
Describe defferals
prvo se plati pa tek onda pružamo service
Describe accurals
prvo se pruži service pa tek se onda dobiju pare
What are bad debts and how do we recognize them in double entry bookkeeping ?
Receivables that we beleive are not gonna be collected. We recognize them as expenses, its a loss in our accounts receivable.
What is direct write-off method?
Koristimo kada znamo da tačno taj jedan specifičan kupac neće moći da isplati dug.
What is allowance method?
Kada sagledamo grupu kupaca koji nece moci da isplate dug
What are deffered incomes in double entry bookeeping?
Liabilities(obligations to provide goods or services that are already paid for)
What is unearned income?
If we didnt manage to provide the service
What are the adjusting entries for unearned income?
Transfer the unearned income from income accounts to unearned revenue(liability) account.
On the balance sheet, how is the net amount shown?
As net book value or carrying amount.
How is taxatation estimated to be payable shown on the income statement and the balance sheet?
as a deduction from profit on the income statement and also as a libaility in the balance sheet .
What are interest on debentures?
Loans with specified conditions
How are interest on debentures recognizes in the double entry bookeeping?
As an expense and liability if not already paid for.
Is a balane sheet part of the double entry book system or the product from it?
It is a product from it
Are liabilities, assets and equities accounts closed down?
no
Are liabilities, assets and equities balances trasffered?
no
what is the main rule of the balance sheet equation wise?
assets=equity+liabilites
Periodic inventory system
We consider cost of gooods sold and raw material to be expenses because it is assumed that they are gonna be used the same year that they have been purchased. And then at the end of the year we check weather we have used them. This method is used in Europe.
Peripetual inventory system
Continously recording inventory changes in real time with computerized point-of-sale-systems.
In the balance sheet how is the allowance for doubtful debts shown?
It is usually shown within the receivables with a negative sign.
Allowances for doubtful debts are assets, equity or liabilities?
Liabilities
What is contra asset account?
Allowances for doubtfull debt account. It decreases receivables but in an indirect way.
How do you calculate net income?
Total debits-total credits(a moze i obrnuto)
If total credits>total debits
=Net Income
if total debits>total credits
=Loss
What are retained earnings?
Firm’s acumulative profits after accounting for dividends.
What happends to the retained earnings if the company has net income?
It increases retained earnings.
Do we use credit or debit side to increase the retained earnings?
Credit side
Reatined earnings are decreased when company has a loss and when else?
When it pays dividends.
At the end of the year when we close the dividends account, where do we transfer the value?
To the debit side of the retained earnings account.
Are retained earnings asset, equity or liability?
Equity
