OTHER TERMS

Question 1

• After accomplishing the trial balance, we can now start with the

Answer 1

adjustment of entries

Question 2

only shows that we have transferred the figures from the book of original entry, which is the general journal to the book of final entry, which is the general ledger, but it will not show you that the figures are correctly stated.

Answer 2

trial balance

Question 3

defined as entries to update or correct an account.

Answer 3

• Adjusting entries

Question 4

The following are various adjustment accounts:

Answer 4

1. Accrued Expenses:
2. Accrued Income:
3. Prepaid Expenses:
4. Unearned Income:
5. Depreciation:
6. Doubtful Account:

Question 5

These are the expenses that are already incurred but not yet paid by the company.

Answer 5

1. Accrued Expenses:

Question 6

This is the income that is already earned by the company but not yet received.

Answer 6

2. Accrued Income:

Question 7

These are the expenses already paid by the company, about not yet incurred or advanced payments.

Answer 7

3. Prepaid Expenses:

Question 8

This is the income already received by the company but not yet earned, or, in other words this is the advance receipt coming from the customers.

Answer 8

4. Unearned Income:

Question 9

Like the prepaid expenses, the adjusting entry depends on the method used by the company, because there are also two methods under this account.

Answer 9

These are the liability method and the income method.

Question 10

This is the systematic allocation of the cost of an asset.

Answer 10

5. Depreciation:

Question 11

is normally used in computing the depreciation of an asset.

Answer 11

The straight line method

Question 12

This is the portion of the estimated collectible accounts.

Answer 12

6. Doubtful Account:

Question 13

Base on the Doubtful account the estimate can be based on a

Answer 13

percentage of income, sales, or a percentage of accounts receivable

Question 14

it happens only when an accountant has committed an error in the recording process or in processing the financial figures.

Answer 14

Correcting entry

Question 15

are reversal of adjusting entries made at the end of the accounting period, which will result in normal recording of transaction in the next accounting period.

Answer 15

Reversal entries

Question 16

can easily be prepared after the working paper is prepared.

Answer 16

• Financial statements

Question 17

facilitates the preparation of financial statements.

Answer 17

working paper

Question 18

What are the different working papers

Answer 18

1. Income statement
2. Statement of comprehensive Income
3. Statement of financial condition
4. Statement of changes in equity
5. Statement of cash flow
6. Notes to the financial statement

Question 19

is the statement that will show the result of operation of the entity.

Answer 19

1. Income statement

Question 20

• is the statement that will show not only the result of the entity’s operation but also other items like forex translation gains and losses.

Answer 20

2. Statement of comprehensive Income

Question 21

is the statement that will show the real condition of the business.

Answer 21

3. Statement of financial condition

Question 22

This is the standard name of the statement and the alternative term is the balance sheet.

Answer 22

3. Statement of financial condition

Question 23

is the statement that will show the changes that took place in the equity section during the year.

Answer 23

4. Statement of changes in equity

Question 24

is the statement that will show the sources and uses of cash during the period it is reported.

Answer 24

5. Statement of cash flow

Question 25

contains notes necessary for the users of the financial statement to fully understand the account title or the line items in the statement.

Answer 25

6. Notes to the financial statement

Question 26

* The first step in the preparation of working paper is

Answer 26

writing the heading

Question 27

The purpose of this is to zero out temporary account by transferring all temporary accounts to a permanent account.

Answer 27

closing entries

Question 28

We prepare this to be assured that we can start with the next accounting period in proper order and that debit is equal to credit.

Answer 28

post-closing trial balance

Question 29

are reversal of adjusting entries made at the end of the accounting period, which will result in normal recording of transaction in the next accounting period

Answer 29

Reversal entries

Question 30

is an accounting activity where accounting corresponds to reconciling the balance of a cash book and the balance of a company's deposit with a bank.

Answer 30

* Bank reconciliation

Question 31

T or F balance of a cash book and the balance of a company's deposit always balance due to timing and nature of their activities

Answer 31

F_do not balance

Question 32

* The following are to be considered whenever accounting makes a bank reconciliation.

Answer 32

1. Undeposited collections 2. Deposits in transit. 3. Credit memo 4. Debit memo 5. Outstanding checks

Question 33

These are the collections that the company has made during the day, but are not yet deposited to the bank.

Answer 33

1. Undeposited collections

Question 34

These are the collections that the company has already made and deposited to the bank but not credited to the company's account because of clearing cut-off.

Answer 34

2. Deposits in transit

Question 35

These are the collections made by the bank and credited by the bank to the company's account. Sometimes, they are loan proceeds which the bank credits to the account of the company. Since the amount is already credited to the account, the book should also have the record of it to balance the account.

Answer 35

3. Credit memo.

Question 36

These are the payments made by the bank in behalf of the company. For this reason, the bank only debits the account of the company.

Answer 36

4. Debit memo.

Question 37

These are the checks issued and released by a company to a payee. Once the check is released the check can already be encashed or not encashed.

Answer 37

5. Outstanding checks

Question 38

is the comparison of figures within the same accounting period.

Answer 38

* Vertical analysis

Question 39

* It is establishing relationship of the size of one account with the standard account to be compared

Answer 39

Vertical analysis

Question 40

In this we consider the sales as 100% because we will compare all the other figures in relation to the sales.

Answer 40

Vertical analysis

Question 41

is the comparison of the previous year's account title with the current year's account title

Answer 41

* Horizontal analysis

Question 42

* Here you are establishing the increase or decrease of the account over the period analyzed. When done for several years, you can develop a trend, which might be helpful to some users of accounting reports.

Answer 42

Horizontal analysis

Question 43

* Computing percentages and ratios in the financial statement has no significance at all if there is no

Answer 43

interpretation, as well as recommendations,