Financial Statement Accounts

Question 1

Receivables

Answer 1

Money owed to a business by others. Assets

Question 2

Accounts Receivables

Answer 2

Money owed to a business by customers for goods and services provided on credit

Question 3

Notes Receivables

Answer 3

Money owed to business from debtors based on a formal written document stating terms of contract

Question 4

Fixed Assets

Answer 4

Assets with long term useful life used in business operations. Tangible assets or Property Plant & Equipment

Question 5

Inventory

Answer 5

Goods and materials held by business that are ready or will be ready for sale

Question 6

Good will

Answer 6

Intangible asset that arises during acquisition. Amount acquirer pays for the target firm less the target’s fair market value of net assets.

Question 7

Payables

Answer 7

Money owed by business to others. Liabilities

Question 8

Accounts Payable

Answer 8

Money owed to suppliers for products or services purchased on credit

Question 9

Wages Payable/Accrued Payroll

Answer 9

Money owed to employees for hours previously worked.

Question 10

Notes Payable

Answer 10

Money owed to banks or creditors based on a formal written document stipulating the terms of contract

Question 11

Common Stock

Answer 11

Shares that represent ownership of a business

Question 12

Preferred Stock

Answer 12

shares representing ownership of business and rank above common stock. in cases if liquidation, preferred share holders will have claim on earnings before common stock holders

Question 13

Contributed Capital

Answer 13

Money investor paid to buy stock directly from the company. (Stated value of shares + paid in capital). Amount over and above par value paid to the company

Question 14

Additional paid-in capital

Answer 14

share holders contribution that exceeds a shares par value

Question 15

Short-term investment is

Answer 15

an Asset

Question 16

Accrued Expenses are

Answer 16

Liability

Question 17

Debit

Answer 17

1) An accounting entry that increases asses, expenses and losses
2) Always on the left-hand side of an account
3) Decreases Liabilities, revenues and owners equity

Question 18

Expenses and Loss accounts

Answer 18

1) Equity accounts
2) Debit to expense and loss accounts increases these accounts
3) Owner’s equity decreases

Question 19

Credit

Answer 19

1) Increase liability, equity, revenue, or gain account
2) Right side of the account
3) Decrease assets and expenses

Question 20

If under Assets, cash increases

Answer 20

it is listed under debit

Question 21

if under assets, cash decreases

Answer 21

it is listed under credit

Question 22

If under Liabilities, accounts payable decreases

Answer 22

it is listed under debit

Question 23

If under liabilities, accounts payable increases

Answer 23

it is listed under credit

Question 24

If under equity, account decreases

Answer 24

it is listed under debit

Question 25

Decrease rent expense

Answer 25

Credit decreases expenses

Question 26

Increase Depreciation

Answer 26

Debit increases expenses

Question 27

Adding up all debits must

Answer 27

equal sum of all credits to keep the accounting equation balanced.

Question 28

Journal Entry

Answer 28

A method to record a transaction

Question 29

What is posting?

Answer 29

Transferring a journal entry to a specific account in ledger is posting to T-Account

Question 30

T-Accounts show

Answer 30

1) Beginning balance of account
2) Debits and Credits
3) Ending Balance of account

Question 31

For equipment maintenance expenses

Answer 31

1) Journal Entry ->Debit expense, Credit ->Accounts Payable (recognize expense immediately as it received maintenance service, records a liability to pay within a month or whatever the term is set to.
2) When cash is actually paid, Accounts Payable -> Debit, Cash->Credit

Question 32

Recording an expense when the inventory is sold

Answer 32

COGS ( Cost Of goods sold) account

Question 33

Matching Principle

Answer 33

Expenses for transaction are recognized at the same time as revenues are recognized.

Question 34

Utilities Expense is an

Answer 34

Operating Expense

Question 35

Owners Equity accounts

Answer 35

Revenue, Expenses, Gains, losses

Question 36

Impact of crediting revenue on Owner’s equity

Answer 36

increases owners equity

Question 37

Impact Of debiting expenses on Owner’s equity

Answer 37

reduces owners equity

Question 38

When a sale is made

Answer 38

1)cash/accts receivable->debit, revenue->credit

2cogs->debit,inventory->credit,

Question 39

Example of Payments In Advance

Answer 39

Gift Cards

Question 40

Impact Of Advance payments on Accounting Equation

Answer 40

Assets (Cash increases), Liabilities (obligation to provide goods and services later) increases

Question 41

Unearned Revenue/Deferred Revenue

Answer 41

Liability Account and not a revenue account

Question 42

Journal Entry For Gift Card purchase & Redeem

Answer 42

1) Gift Card purchase=>Cash Debit, Deferred revenue Credit

2) Gift Card redeem=>Deferred revenue Debit, Revenue Credit

Question 43

Revenue Recognition Journal Entries

Answer 43

1) Cash collected from customer (Debit), Revenue (Credit)
2) Cash not collected/accts receivable (debit), revenue earned (credit). When cash is ultimately paid by customer=> accts receivable(credit), cash (debit)
3)Cash collected from customer (debit), revenue was not earned (Deferred revenue) (credit)
After company received good or service
(revenue->credit, deferred revenue->debit)

Question 44

Prepaid expenses are not expense accounts but they are

Answer 44

Assets. Example prepaid insurance.

Question 45

Journal Entries for Prepaid Expenses When initially paid

Answer 45

1) Prepaid insurance (Assets) -> Debit

2) Cash ->Credit

Question 46

Journal Entries to recognize prepaid expense

Answer 46

1) Insurance Expense -> Debit

2) Prepaid insurance ->Credit

Question 47

Trial Balance is needed to prepare

Answer 47

Balance sheet and Income Statement

Question 48

Trial balance accounts order

Answer 48

1)Assets 2)Liabilities 3)Equity 4)Revenue and Expense

Question 49

Impact of interest on Notes Payable on Trial Balance

Answer 49

1)Accrued Interest Liability (credit) 2)Interest Expense (Debit)