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Grade 11 Exam Reviews > BAF3M Exam Review > Flashcards

BAF3M Exam Review Flashcards

1
Q

Define: Asset

A

Items of value owned by a business or person

A = L + OE

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2
Q

Define: Liabilities

A

The debts of a business or person

L = A - OE

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3
Q

Define: Owner’s Equity

A

The section of a balance sheet that includes capital and drawings

OE = A - L

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4
Q

Define: Capital

A

The owner’s claim of the assets of the company

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5
Q

Define: Drawings

A

An equity account used to record the withdrawal of assets by an owner; a contra equity account

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6
Q

Define: Revenues

A

Amounts earned by the business from the sale of goods or services during routine operations

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7
Q

Define: Expenses

A

The cost incurred to generate revenue: separate expense accounts are used for each major type of expense

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8
Q

Define: Transaction

A

An exchange or interaction between people/businesses

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9
Q

Define: Source Documents

A

The original document showing that a transaction has occurred

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10
Q

Define: Chart of Accounts

A

A list of all account names and numbers in the general ledger

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11
Q

Define: Journal

A

A chronological record of all of a company’s transactions

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12
Q

Define: Ledger

A

A group of accounts that may be in the form of a book containing pages for each account

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13
Q

Define: Trial Balance

A

A list of all active ledger accounts; total debits must equal total credits; proves mathematical accuracy of ledger

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14
Q

Define: Balance Sheet

A

A formal financial statement that lists assets, liabilities and owner’s equity at a specific date

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15
Q

Define: Income Statement

A

A formal financial statement that summarizes revenue and expenses to determine the net income or net loss for a stated period of time

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16
Q

Define: Accounting Cycle

A

The set of accounting procedures preformed in each accounting period

  1. Source Documents
  2. Journalizing
  3. Post to Ledger
  4. Trial Balance
  5. Worksheet & Adjustments
  6. Financial Statements (I.S., SofOE, B.S.)
  7. Journalize Adjusting Entries
  8. Journalize Closing Entries (R.E.D.I.)
  9. Post Closing Trial Balance
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17
Q

Define: Adjusting Entries

A

Journal entries usually made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

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18
Q

Define: Closing Entries

A

Journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.

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19
Q

Define: Post Closing Trial Balance

A

A trial balance that is prepared after closing entries have been posted; contains only assets, liabilities and capital accounts

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20
Q

Define: Worksheet

A

A form that organizes accounting data for preparation of financial statements

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21
Q

Define: Depreciation

A

The allocation of the cost of a fixed asset to the fiscal periods in which it is used

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22
Q

Define: Accumulated Depreciation

A

A contra asset account recorded each accounting period. Used to determine an asset’s book value

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23
Q

Define: Cash Control

A

A way to monitor credit, collection, cash allocation and disbursement policies, as well as invoicing functions.

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24
Q

Define: Contra Account

A

An account whose balance reduces the value of the account it describes; used to arrive at the book value of assets

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25
Q

Define: Net Book Value

A

the value of an asset as recorded in the accounts of its owner.

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26
Q

Define: Current Assets

A

Cash or other assets that are converted into cash in the ordinary course of business, usually within a year

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27
Q

Define: Fixed Assets

A

Assets that have a long life (Over one year)

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28
Q

Define: Current Liabilities

A

Liabilities due to be paid within a year

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29
Q

Define: Long Term Liabilities

A

Liabilities not due to be paid for more than one year

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30
Q

Define: Service Business

A

A business that sells a service

Ex, Autoshop

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31
Q

Define: Merchandise Business

A

A business that sells merchandise to customers (wholesaler or retailer)
Ex, Bluenotes

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32
Q

Define: Manufacturing Business

A

A business that converts raw materials into saleable goods

Ex, Ford plant

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33
Q

Define: Sales Discounts

A

A discount offered to a customer to encourage early payment of account balances

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34
Q

Define: Sales Returns

A

The account used by the seller to record merchandise returned by a customer; a contra revenue account

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35
Q

Define: Transportation In

A

The account used to record the transportation charges on merchandise purchased

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36
Q

Define: Delivery Expense

A

The account used to record the cost of delivering merchandise to customers

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37
Q

Define: Purchases

A

The account used to record the cost of merchandise purchased for resale

38
Q

Define: Gross Profit

A

The total earnings of an employee before deductions

39
Q

Define: Cost of Goods Sold

A

The account used to record all costs associated with merchandise that has been sold

40
Q

Define: Special Journals

A

Uses separate multicolumn journals for similar transactions that reoccur frequently

41
Q

Define: Columnar Journals

A

An alternative manual accounting system journal form designed with special columns for entries to accounts used often and an other accounts column for entries to accounts for which a special column is not provided

42
Q

Define: Subsidiary Ledger

A

A group of accounts of one type usually organized in alphabetical order; most common are account receivable subsidiary ledger and accounts payable subsidiary ledger

43
Q

Define: Control Account

A

A general ledger account, the balance of which equals the total of the account balances in a particular subsidiary ledger; for every subsidiary ledger, there is a control account in the general ledger

44
Q

Define: Bank Reconciliation

A

A Bank reconciliation is a process that explains the difference between the bank balance shown in an organization’s bank statement, as supplied by the bank, and the corresponding amount shown in the organization’s own records at a particular point in time.

45
Q

Define: Petty Cash

A

An amount of cash used to make small payments

46
Q

Define: GAAP

A

Generally Accepted Accounting Principals

  • Standard accounting rules and guidelines
  • Ensure that accounting is understandable, relevant, comparable and reliable
47
Q

Define: Business Entity Concept

A
  • Keeps personal and business records separate

- Keep separate records for each business

48
Q

Define: Cost Principle

A
  • Assets are recorded on the balance sheet at the price you paid for them
  • These values are not changed if the market value increases over time
49
Q

Define: Objectivity Principle

A

All data should be free from any bias and be verifiable to support the value used to record transactions

50
Q

Define: Matching Principle

A

Expenses must be recorded at the same time and matched with the revenue they helped generate

51
Q

Define: Time Period Principle

A

The period of time used in an accounting period must be clearly defined and never changed

52
Q

Define: Revenue Recognition Principle [Realization}

A

Revenue is recognized as soon as it is earned (not when paid)

53
Q

Define: Materiality Principle

A

You must follow the rules unless it will cost way too much and/or it won’t make much of a difference

54
Q

Define: Consistency Principle

A

Requires accountants to use the same methods and procedures from period to period

55
Q

Define: Disclosure Principle

A

Information that could affect the decisions of the users of financial statements be included when the financial statements are prepared

56
Q

Define: Principle of Conservatism

A

Where there are multiple acceptable accounting treatments for an item, accountants must chose the one that will result in lower net income and net assets

57
Q

Accounting formulas: Net Income

A

Net Income = Total Revenue - Total Expenses

What is left of the revenue a company generates after deducting all expenses of the company’s activities.

If the number resulting from the calculation is negative, then the company suffered a net loss.

58
Q

Accounting formulas: Net Book Value

A

Net Book Value = Cost of Asset - Accumulated Depreciation

The value at which a company carries an asset on its balance sheet.

59
Q

Accounting formulas: Straight Line Depreciation

A

(Original Cost - Resale) / Estimated Life / 12months = Amount/Month (multiply by amount of months in accounting period)

60
Q

Accounting formulas: Declining Balance Depreciation

A

(Original Cost - Acc. Deprn.) x Rate(%) Depreciation / 12months = Amount/Month (multiply by amount of months in accounting period)

61
Q

Accounting formulas: Supplies Used/Expense

A

Supplies Used/Expense = Supplies (On Trial Balance) - Supplies on hand

62
Q

Accounting formulas: Insurance Expired/Expense

A

Prepaid Insurance Cost / Totals Months Paid for = Cost/Month (Multiply by # of months for adjustment)

63
Q

Accounting formulas: Gross Profit

A

Revenues/Sales - Total Costs of Goods = Gross Profit

64
Q

Accounting formulas: Current Ratio

A

Current Assets / Current Liabilities = Solid Number

Indicates a company’s abilities to pay off short term debts

> 1 = Good

65
Q

Accounting formulas: Working Capital

A

Current Assets - Current Liabilities = $ Amount

Indicates amount of assets available to a company after paying its current liabilities

66
Q

*Accounting formulas: Debt Ratio

A

Total Liabilities / Total Assets x 100% = % Number

Indicates how much a company is financed by creditors

67
Q

*Accounting formulas: Equity Ratio

A

Total Owner’s Equity / Total Assets x 100% = % Number

Indicates how much a company is financed by the owner

68
Q

Accounting formulas: Net Income as % of Sales

A

Net Income / Net Sales x 100% = % Number

Indicates how much a company earns from each dollar of sales after paying expenses

69
Q

Accounting formulas: Gross Profit Margin

A

Gross Profit / Net Sales x 100% = % Number

Indicates how much a company earns from each dollar of sales before paying expenses

70
Q

Sales invoice

A

Sale on Account

DR: Accounts Receivable
CR: Fees Earned

71
Q

Cash Sales Slip

A

Sold for Cash Now

DR: Cash
CR: Fees Earned

72
Q

Purchase invoice

A

Buy now, Pay later

DR: Asset (Ex. Supplies)
CR: Accounts Payable

73
Q

Cheques issued

A

Making a payment

DR: Asset or Expense
CR: Cash

74
Q

Cheques received

A

Being Paid

DR: Cash
CR: Accounts Receivable

75
Q

Cash receipt list

A

Being Paid

DR: Cash
CR: Accounts Receivable

76
Q

Bank debit memo

A

Bank Collects Money

DR: Interest Expense
CR: Cash

77
Q

Bank credit memo

A

Bank Gives Money

DR: Cash
CR: Interest Earned

78
Q

Credit invoice issued

A

Giving a credit

DR:
CR: Accounts Receivable

79
Q

Credit invoice received

A

Receiving a credit

DR: Accounts Payable
CR:

80
Q

Cash Refund Slip issued

A

Provide Refund

DR:
CR: Cash

81
Q

Cash Refund Slip received

A

Receive Refund

DR: Cash
CR:

82
Q

Schedule of Cost of Goods Sold (simple)

A 
Beginning Inventory
Add: Purchases
Cost of Goods Available
Less: Ending Inventory (single underline)
Cost of Goods Sold (double underline)
83
Q

Schedule of Cost of Goods Sold (detailed)

A 
Beginning Inventory
Add: Purchases
Less: Purchase Returns
Purchase Discounts (single underline)
Net Purchases
Transportation In (single underline)
Cost of Goods Purchased
Cost of Goods Available
Less: Ending Inventory (single underline)
Cost of Goods Sold (double underline)
84
Q

Statement of Owner’s Equity

A 
Owner's Equity (Underlined)
Name, Capital (Beginning)
Net Income
Less: Name, Drawings
Decrease/Increase in Capital
Name, Capital (Ending)
85
Q

Classified Balance Sheet

A

Assets (Centred Heading)
Current Assets (Heading and List)
Total Current Assets

Fixed Assets (Heading and List)
Total Fixed Assets

Total Assets

Liabilities And Owner’s Equity (Centred Heading)
Current Liabilities (Heading and List)
Total Current Liabilities

Fixed Liabilities (Heading and List)
Total Fixed Liabilities

Owner’s Equity (Heading
Name, Capital (Ending)

Total Liabilities and Equity

86
Q

Income Statement: Service Business

A

Revenues (Heading and List)
Total Revenues

Gross Profit

Expenses (Heading and List)
Total Expenses

Net Profit

87
Q

Income Statement: Merchandise Business

A

Revenues (Heading and List)
Total Revenues

Expenses (Heading and List Starting with Cost of Goods Sold)
Total Expenses

Net Income/Loss

88
Q

Accounting Cycle

A
  1. Source Documents (when transaction occurs)
  2. Journalizing (when transaction occurs)
  3. Post to Ledger (when transaction occurs)
  4. Prepare Trial Balance (at any given date)
  5. Prepare Worksheet + Adjustments (end of accounting period)
  6. Prepare Financial Statements (for a period of time)
  7. Journalize + Post Adjusting Entries (end of accounting period)
  8. Journalize + Post Closing Entries (end of accounting period)
  9. Prepare Post Closing Trial Balance (end of accounting period)
89
Q

HST Rules

A

HST Payable: Sales transactions
*add transaction: cost of goods sold and inventory underneath

HST Receivable: Purchase transactions

90
Q

Bank Reconciliation Account Names/Order

A

Balance per…

Less:….
Revised Balance

Add:….

True Bank Balance

Grade 11 Exam Reviews (5 decks)

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