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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
Define: Net Book Value
the value of an asset as recorded in the accounts of its owner.
26
Define: Current Assets
Cash or other assets that are converted into cash in the ordinary course of business, usually within a year
27
Define: Fixed Assets
Assets that have a long life (Over one year)
28
Define: Current Liabilities
Liabilities due to be paid within a year
29
Define: Long Term Liabilities
Liabilities not due to be paid for more than one year
30
Define: Service Business
A business that sells a service | Ex, Autoshop
31
Define: Merchandise Business
A business that sells merchandise to customers (wholesaler or retailer) Ex, Bluenotes
32
Define: Manufacturing Business
A business that converts raw materials into saleable goods | Ex, Ford plant
33
Define: Sales Discounts
A discount offered to a customer to encourage early payment of account balances
34
Define: Sales Returns
The account used by the seller to record merchandise returned by a customer; a contra revenue account
35
Define: Transportation In
The account used to record the transportation charges on merchandise purchased
36
Define: Delivery Expense
The account used to record the cost of delivering merchandise to customers
37
Define: Purchases
The account used to record the cost of merchandise purchased for resale
38
Define: Gross Profit
The total earnings of an employee before deductions
39
Define: Cost of Goods Sold
The account used to record all costs associated with merchandise that has been sold
40
Define: Special Journals
Uses separate multicolumn journals for similar transactions that reoccur frequently
41
Define: Columnar Journals
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
Define: Subsidiary Ledger
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
Define: Control Account
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
Define: Bank Reconciliation
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
Define: Petty Cash
An amount of cash used to make small payments
46
Define: GAAP
Generally Accepted Accounting Principals - Standard accounting rules and guidelines - Ensure that accounting is understandable, relevant, comparable and reliable
47
Define: Business Entity Concept
- Keeps personal and business records separate | - Keep separate records for each business
48
Define: Cost Principle
- 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
Define: Objectivity Principle
All data should be free from any bias and be verifiable to support the value used to record transactions
50
Define: Matching Principle
Expenses must be recorded at the same time and matched with the revenue they helped generate
51
Define: Time Period Principle
The period of time used in an accounting period must be clearly defined and never changed
52
Define: Revenue Recognition Principle [Realization}
Revenue is recognized as soon as it is earned (not when paid)
53
Define: Materiality Principle
You must follow the rules unless it will cost way too much and/or it won't make much of a difference
54
Define: Consistency Principle
Requires accountants to use the same methods and procedures from period to period
55
Define: Disclosure Principle
Information that could affect the decisions of the users of financial statements be included when the financial statements are prepared
56
Define: Principle of Conservatism
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
Accounting formulas: Net Income
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
Accounting formulas: Net Book Value
Net Book Value = Cost of Asset - Accumulated Depreciation The value at which a company carries an asset on its balance sheet.
59
Accounting formulas: Straight Line Depreciation
(Original Cost - Resale) / Estimated Life / 12months = Amount/Month (multiply by amount of months in accounting period)
60
Accounting formulas: Declining Balance Depreciation
(Original Cost - Acc. Deprn.) x Rate(%) Depreciation / 12months = Amount/Month (multiply by amount of months in accounting period)
61
Accounting formulas: Supplies Used/Expense
Supplies Used/Expense = Supplies (On Trial Balance) - Supplies on hand
62
Accounting formulas: Insurance Expired/Expense
Prepaid Insurance Cost / Totals Months Paid for = Cost/Month (Multiply by # of months for adjustment)
63
Accounting formulas: Gross Profit
Revenues/Sales - Total Costs of Goods = Gross Profit
64
Accounting formulas: Current Ratio
Current Assets / Current Liabilities = Solid Number Indicates a company's abilities to pay off short term debts >1 = Good
65
Accounting formulas: Working Capital
Current Assets - Current Liabilities = $ Amount Indicates amount of assets available to a company after paying its current liabilities
66
*Accounting formulas: Debt Ratio
Total Liabilities / Total Assets x 100% = % Number Indicates how much a company is financed by creditors
67
*Accounting formulas: Equity Ratio
Total Owner's Equity / Total Assets x 100% = % Number Indicates how much a company is financed by the owner
68
Accounting formulas: Net Income as % of Sales
Net Income / Net Sales x 100% = % Number Indicates how much a company earns from each dollar of sales after paying expenses
69
Accounting formulas: Gross Profit Margin
Gross Profit / Net Sales x 100% = % Number Indicates how much a company earns from each dollar of sales before paying expenses
70
Sales invoice
Sale on Account DR: Accounts Receivable CR: Fees Earned
71
Cash Sales Slip
Sold for Cash Now DR: Cash CR: Fees Earned
72
Purchase invoice
Buy now, Pay later DR: Asset (Ex. Supplies) CR: Accounts Payable
73
Cheques issued
Making a payment DR: Asset or Expense CR: Cash
74
Cheques received
Being Paid DR: Cash CR: Accounts Receivable
75
Cash receipt list
Being Paid DR: Cash CR: Accounts Receivable
76
Bank debit memo
Bank Collects Money DR: Interest Expense CR: Cash
77
Bank credit memo
Bank Gives Money DR: Cash CR: Interest Earned
78
Credit invoice issued
Giving a credit DR: CR: Accounts Receivable
79
Credit invoice received
Receiving a credit DR: Accounts Payable CR:
80
Cash Refund Slip issued
Provide Refund DR: CR: Cash
81
Cash Refund Slip received
Receive Refund DR: Cash CR:
82
Schedule of Cost of Goods Sold (simple)
``` Beginning Inventory Add: Purchases Cost of Goods Available Less: Ending Inventory (single underline) Cost of Goods Sold (double underline) ```
83
Schedule of Cost of Goods Sold (detailed)
``` 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
Statement of Owner’s Equity
``` Owner's Equity (Underlined) Name, Capital (Beginning) Net Income Less: Name, Drawings Decrease/Increase in Capital Name, Capital (Ending) ```
85
Classified Balance Sheet
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
Income Statement: Service Business
Revenues (Heading and List) Total Revenues Gross Profit Expenses (Heading and List) Total Expenses Net Profit
87
Income Statement: Merchandise Business
Revenues (Heading and List) Total Revenues Expenses (Heading and List Starting with Cost of Goods Sold) Total Expenses Net Income/Loss
88
Accounting Cycle
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
HST Rules
HST Payable: Sales transactions *add transaction: cost of goods sold and inventory underneath HST Receivable: Purchase transactions
90
Bank Reconciliation Account Names/Order
Balance per... Less:.... Revised Balance Add:.... True Bank Balance

Grade 11 Exam Reviews (5 decks)

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