Exam :( Flashcards
pt 1. Define the gap principles
- Business entity concept:
- Continuing concern concept:
- principle of conservatism:
- objectivity principles:
- Business entity concept:accounting for biz and owners are separate
- Continuing concern concept: assume the biz will live forever
- principle of conservatism:no overstating or understanding things. put real amounts
- objectivity principles: accounting will be objective and fair
pt2. define the gaap principles
- revenue recognition convention:
6.mating/expense principle:
- time period concept:
- revenue recognition convention: revenue is recorded When earned not when collected
6.mating/expense principle:
- time period concept: fisco periods must be consistent
pt3. define the gaap principles
- cost principle:
- consistency principle:
- materiality principle:
- full disclosure principle:
- cost principle:items bought don’t change values. write as $ bought for
- consistency principle:same methods of calculations must be consistent over fisco periods
- materiality principle:accountants MUST use gaap expect when private enterprises
- full disclosure principle: biz must be transparent about anything that will effect the buisness’s earnings in financial statements
what does gaap stand for? who uses it?
Gaap: generally accepted accounting principles
Public business
what is and there equations
- working Capital:
2.current ratio:
3.debt ratio
4.equity ratio:
- working Capital:how much $ and things that can quickly be turned into $ you have to use
current assets - current liabilities= working capital
2.current ratio:$ to pay off immediate debt. 2:1 is acceptable
Current assets/Current liabilities= current ratio
3.debt ratio:debts in comparison to assets (dollar for dollar)
Debts(total liabilities)/Assets=debts ratio
4.equity ratio: How much the owner is getting back for their investments
OE/assets=equity ratio
What is
IFRS
ASPE
GAAP
IFRS:
International Financial Reporting Standards
the standard for how finances are organized internationally for Consistency
ASPE:
Accounting Standards for Private Enterprises.
Used by private business
GAAP:
generally accepted accounting principles.
used by public business
What goes on a classified balance sheet?
Debit:
Current assets
fixed assets
Drawings
Credit:
current liabilities
fixed liabilities
Owner’s equity
Capital
What goes on a Classified income statement?
revenue
Cost of goods sold
-beginning inventory
-purchases
-transportation in
-ending inventory
Gross profit
administrative expenses
depreciation, general, salaries, supplies, utilities, interest
Selling expenses
Advertising, bad debt, store expenses
Net income/loss
what accounts are used in periodic business?
-Sales
-Sales discounts
-sales returns and allowances
-transportation-in
-purchases
what accounts do perpetual business use?
-sales
-sales discounts
-sales returns and allowances
-Merchandise inventory
-Cost of goods sold
What is
GST:
PST:
HST:
GST recoverable:
PST payable
HST recoverable:
HST payable:
GST:Goods and services tax (collected by federal government)
PST: Provincal sales tax
HST:harmonized sales tax (Gst +Pst)
GST recoverable: $ a business gets back from a purchase
PST payable:$ collected from sales need to pay to the Provencal gov
HST recoverable:$ recoverable from a business purchase
HST payable:$ owed to gov from sales
What is the straight line method and the declining balance method?
Methods to calculate depreciation
straight line method: same amount each year
declining balance method: different amount each year
what are the balance sheet method and the percent of net sales method?
Method to estimate bad debt
what are the accounts for these numbers?
100s:
200:
300:
400:
500:
100s: assets
200:liability
300:owners equity
400:revenue
500: expenses
what goes on a Bank reconciliation statement?
Bank side:
outstanding cheques
deposit in tranist
book side:
erros
NSF cheque
Bank service charge
