financial statements

Question 1

financial statements

Answer 1

-balance sheet
-income statement
-cash flow statement

Question 2

two methods for recording transactions

Answer 2

-cash base accounting
-accrual basis accounting

Question 3

cash basis accounting

Answer 3

recognizes a tranaction at the time when cash exchanges hands, simple not accurate

Question 4

accrual basis accounting

Answer 4

revenue when it is earned, regardless of when cash is received

recognizes expenses when they are incurred regardless of when payment is made

Question 5

income statement known as

Answer 5

profit and loss statement
shows whether an operation has made of lost money over a specfic period of time

Question 6

profit or loss =

Answer 6

sales (revenues) - expenses

Question 7

3 major elements of income statements

Answer 7

1. total revenue (income)
2. total expenditures by category
3. profit or loss for statement period

Question 8

income statment: revenues

Answer 8

• sales
  -misc
  interest/devidends
  other donations grants

Question 9

income statment: expenses

Answer 9

COGS
labor costs- salaries and wages
employee benefits
supplies
employee benefits
services
rent utilities
depreciation

Question 10

balance sheet

Answer 10

**portrays the financial condition of the enterprise at any particular time
time it was start to current time **

Question 11

assets=

Answer 11

liabilities + owners’ equity

Question 12

balance sheet: Assets

Answer 12

cash, inventory, accounts receivable (funds due to you) deposits, equipment -depreciation

Question 13

balance sheet: liabilities

Answer 13

accounts payable (obligations), accrued salaries/benefits
loans
taxes

Question 14

balance sheet: equity

Answer 14

owners’ investment
accumulated profits or losses from the beginning of the business

Question 15

GAAP

Answer 15

-Generally
-Accepted
- Accounting
-Principles
– Makes the financial reporting process
transparent and standardizes assumptions.

Question 16

double entry bookkeeping

Answer 16

every action has an opposite reactions
credits offset by debits
you must record it somewhere else
ASSETS = LIABILITIES + OWNERS EQUITY

Question 17

Assets (+)
* Liabilities (-)
* Shareholder’s Equity (-)

Answer 17

balance sheet

Question 18

Revenue (-)
* Expenses (+)

Answer 18

income statment

Question 19

signs – except contra accounts

Answer 19

Assets (+)
– Depreciation (-) to Equipment
– COGS (-) to Inventory
* Liabilities (-)
* Shareholder’s Equity (-)
* Revenue (-)
* Expenses (+)

Question 20

equity

Answer 20

monetary value
beyond what you owe
owners or shareholders

Question 21

equity =

Answer 21

total assets- total liabilities

Question 22

decay in price of piece of equipment, record depreciation monthly
$10k equipment that lasts 10 years
$10,000 / 10 years / 12 months per year
= $83.33 expense every month

Answer 22

depreciation

Question 23

prepaid expenses

Answer 23

could be paid 1/12 months
in January, wrote. check from assets 1200, it costs $100 a month for this contract, you have $1100 left of that contract

income statment: every month you will have an $100 expense

Question 24

prepaid expense monthly statment

Answer 24

will be listed as an asset of balance sheet
insurance expense every month of $100

Question 25

I buy $100 meal
i collect 8% sales tax
cash + 108 (deposited into checking account)
liability sales tax owed -$8
sales revenue -100

Answer 25

sales tax

Question 26

Where did I get FOOD to make your $100 dinner?
* FROM INVENTORY
* That’s what the 30% food cost means

Answer 26

CoGS

Question 27

Over times

Answer 27

hourly x 1.5

Question 28

• WHERE DO I DOCUMENT COGS??

Answer 28

– Contra account to Asset Inventory -$30
* $100 x 30% = $30
– COGS Expense +$30

Question 29

employer tax matches?

Answer 29

matches SS (FICA) currently 7.65 % comes out of our check, employer is also paying 7.65 % to SS

Question 30

how much SS does self emplyed person pay

Answer 30

pays 15.3%

Question 31

employees taxes includes

Answer 31

-FIT federal income tax
-FICA federal insurance contributions act (social security and medicare)
-state
city

Question 32

what does the employer pay?

Answer 32

Unemployment
workers comp
FICA

Question 33

what does the employee pay

Answer 33

Federal Income Tax
* State Income Taxes
* City Income Taxes
FICA