MD#2 : The Statement of Financial Position and The Statement of Owner's Equity (1st Grading Period) Flashcards
1
Q
- It shows the financial condition of a company as of a given time.
- It is a clear representation of the accounting equation Assets = Liabilities + Owner’s Equity.
A
Statement of Financial Position / Balance Sheet
2
Q
- It can be defined as resources or things of value that are owned by a company as the result of company transactions.
A
Assets
3
Q
- It is a company’s cash and its other assets that are expected to be converted to cash within one year of the date appearing in the heading of the company’s balance sheet.
A
Current Assets
4
Q
- These are classified and presented according to liquidity with the most liquid followed by those with lesser liquidity.
- It is always listed first followed by other current assets according to their proximity to cash.
A
Current Assets
5
Q
- It includes coins, currencies, checks, bank deposits, and other cash items readily available for use in the operations of the business.
A
Cash
6
Q
- These are short-term investments that are readily convertible to known amounts of cash which are subject to an insignificant risk to changes in value.
A
Cash Equivalents
7
Q
- These are stocks and bonds purchased by the enterprise and are to be held for only a short span of time or a short duration. They are usually purchased when a business has excess cash.
A
Marketable Securities
8
Q
- It includes the amounts collectible from any of the following accounts:
1. Accounts Receivables
2. Advances To Employees
3. Accrued Income
A
Trade and Other Receivables
9
Q
- It is the amount from the customer to whom sales have been made or services have been rendered on account or credit.
A
Accounts Receivable
10
Q
- It is a promissory note issued by the client or the customer
in exchange for services or goods received as evidence of his/her obligation to pay.
A
Notes Receivable
11
Q
- It is the amount of interest collectible on promissory notes received from the customers and clients.
A
Interest Receivable
12
Q
- It is a certain amount of money loaned to employees payable in cash or through salary deductions.
A
Advances To Employees
13
Q
- It is income already earned but not yet received.
A
Accrued Income
14
Q
- It represent the unsold goods at the end of the accounting period. This is applicable only to a merchandising business.
A
Inventories
15
Q
- It include supplies bought for use in the business or services and benefits to be received by the business in the future paid in advance.
A
Prepaid Expenses
16
Q
- These are accounts deducted from the related asset accounts. The following are the
contra-asset accounts:
1. Allowance For Bad Debts
2. Accumulated Depreciation
A
Contra-Asset Accounts
17
Q
- These are losses due to uncollectible accounts. This is deducted from the Accounts Receivable account to get the net realizable value.
A
Allowance For Bad Debts
18
Q
- It represents the expired cost of property, plant and equipment as a result of usage and passage of time.
- This is deducted from the cost of the related asset account to get the carrying value or book value of the asset.
A
Accumulated Depreciation
19
Q
- It is an asset that is not expected to turn to cash within one year of date shown on a
company’s balance sheet. - It is also known as a long-term asset.
A
Non-Current Assets
20
Q
- It is an account on the asset side of a company’s balance sheet that represents the
company’s investments, including stocks, bonds, real estate, and cash. - These are assets that a company intends to hold for more than a year.
A
Long-Term Investment
21
Q
- These are tangible assets that are held for use in the production or supply of goods or services or for administrative purposes and which are expected to be used for more than one period.
- Examples of Property, Plant and Equipment are: Land, Building, and Equipment.
A
Property, Plant, and Equipment
22
Q
- It is a piece of lot or real estate owned by the enterprise on
which a building can be constructed for business purposes.
A
Land
23
Q
- It is an edifice or structure used to accommodate the office, store, or factory of a business enterprise in the conduct of its operations.
A
Building
24
Q
- It includes typewriter, air-conditioner, calculator, filing cabinet, computer, electric fan, trucks and cars used by the business in its office, store or factory.
- Specific account titles may be used such as Office Equipment, Store Equipment, Delivery Equipment, Transportation Equipment, Machinery and Equipment.
A
Equipment
25
Q
- It include tables, chairs, carpets, curtains, lamp and lighting fixtures and wall decors.
- Specific account titles maybe used such as Office Furniture and Fixtures and Store Furniture ad Fixtures.
A
Furnitures and Fixtures
26
Q
- These are identifiable, non-monetary assets without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.
A
Intangible Assets
27
Q
- These are obligations of the company; they are amounts owed to creditors for a past transaction and they usually have the word “payable” in their account title.
- These are presented based on their maturity. Obligations presently due for payment are listed first.
A
Liabilities
28
Q
- It is :
A. Expected to be settled in the entity’s normal operating cycle;
B. Held primarily for the purpose of being traded; and
C. Due to be settled within twelve (12) months after the Balance Sheet date.
A
Current Liability
29
Q
- It include payables from any of the following accounts:
1. Accounts Payable
2. Notes Payable
3. Loan Payable
4. Utilities Payable
5. Unearned Revenue
A
Trade and Other Payables
30
Q
- It include debts arising from purchase of an asset or acquisition of services on account.
A
Accounts Payable
31
Q
- It includes debts arising from purchase of an asset or acquisition of services on account evidenced by a promissory note.
A
Notes Payable
32
Q
- It is a liability to pay the bank or other financing institution arising from funds borrowed by the business from these institutions payable within twelve months or shorter.
A
Loan Payable
33
Q
- It is an obligation to pay utility companies for services received from them.
- Examples of this are telephone services to PLDT, electricity to MERALCO, and water services to Maynilad.
A
Utilities Payable
34
Q
- It represent obligations of the business arising from advance payments received before goods or services are provided to the customer.
- This will be settled when certain goods and services are delivered or rendered.
A
Unearned Revenue
35
Q
- It include amounts owed to others for expenses incurred but not yet paid.
- Examples of these are salaries payable, utilities payable, taxes payable, and interest payable.
A
Accrued Liabilities
36
Q
- These are long-term liabilities or obligations which are payable for a period longer
than one year. - Examples of Non-Current Liabilities are as follows:
1. Mortgage Payable
2. Bond Payable
A
Non-Current Liabilities
37
Q
- It is a long-term debt of the business with security or collateral in the form of real
properties.
A
Mortgage Payable
38
Q
- It is a certification of indebtedness under the seal of a corporation, specifying the terms of repayment and the rate of interest to be charged.
A
Bonds Payable
39
Q
- Along with liabilities, it can be thought of as a source of the company’s assets.
- It is sometimes referred to as the book value of the company, because it is equal to the reported asset amounts minus the reported liability amounts.
- It may also be referred to as the residual of assets minus liabilities.
A
Owner’s Equity
40
Q
“Owner’s Equity” are the words used on the balance sheet when the company is a ___.
A
Sole Proprietorship
41
Q
If the company is a corporation, the words ___ are used instead of Owner’s Equity.
A
Stockholder’s Equity
42
Q
Examples of stockholders’ equity accounts include:
A
A. Common Stock
B. Preferred Stock
C. Paid-in Capital in Excess of Par Value
D. Paid-in Capital from Treasury Stock
E. Retained Earnings
F. Accumulated Other Comprehensive Income
43
Q
The Two Form of Statement of Financial Position
A
- Account Form
- Report Form
44
Q
- It follows the accounting equation where assets are listed on the left-hand column of the report with the liabilities and owner’s equity listed on the right hand column.
A
Account Form
45
Q
- It shows in one straight column the assets, followed by liabilities and owner’s equity.
A
Report Form
46
Q
- It shows the changes in the CAPITAL or OWNER’S EQUITY as a result of additional investment or withdrawals by the owner, plus or minus the Net Income or Net Loss for the year.
A
Statement of Changes in Owner’s Equity or Statement of Owner’s Equity
47
Q
- It is an account bearing the name of the owner representing the original and additional investment of the owner of the business increased by the amount of net income earned during the year. - It is decreased by the cash or other assets withdrawn by the owner as well as the net loss incurred during the year.
A
Capital
48
Q
- It represents the withdrawals made by the owner of the business either in cash or other assets.
A
Drawing
49
Q
- It is a temporary account used at the end of the accounting period to close income and
expense accounts. - The balance of this account shows the Net Income or Net Loss for the period before it is closed to the capital account.
A
Income Summary
