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ACCOUNTING > OTHER TERMS > Flashcards

OTHER TERMS Flashcards

1
Q
  • After accomplishing the trial balance, we can now start with the
A

adjustment of entries

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2
Q

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.

A

trial balance

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3
Q

defined as entries to update or correct an account.

A
  • Adjusting entries
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4
Q

The following are various adjustment accounts:

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

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

A
  1. Accrued Expenses:
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6
Q

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

A
  1. Accrued Income:
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7
Q

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

A
  1. Prepaid Expenses:
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8
Q

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.

A
  1. Unearned Income:
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9
Q

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

A

These are the liability method and the income method.

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10
Q

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

A
  1. Depreciation:
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11
Q

is normally used in computing the depreciation of an asset.

A

The straight line method

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12
Q

This is the portion of the estimated collectible accounts.

A
  1. Doubtful Account:
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13
Q

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

A

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

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14
Q

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

A

Correcting entry

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15
Q

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.

A

Reversal entries

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16
Q

can easily be prepared after the working paper is prepared.

A
  • Financial statements
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17
Q

facilitates the preparation of financial statements.

A

working paper

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18
Q

What are the different working papers

A
  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
19
Q

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

A
  1. Income statement
20
Q
  • 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.
A
  1. Statement of comprehensive Income
21
Q

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

A
  1. Statement of financial condition
22
Q

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

A
  1. Statement of financial condition
23
Q

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

A
  1. Statement of changes in equity
24
Q

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

A
  1. Statement of cash flow
25
Q

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

A
  1. Notes to the financial statement
26
Q
  • The first step in the preparation of working paper is
A

writing the heading

27
Q

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

A

closing entries

28
Q

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.

A

post-closing trial balance

29
Q

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

A

Reversal entries

30
Q

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.

A
  • Bank reconciliation
31
Q

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

A

F_do not balance

32
Q
  • The following are to be considered whenever accounting makes a bank reconciliation.
A
  1. Undeposited collections
  2. Deposits in transit.
  3. Credit memo
  4. Debit memo
  5. Outstanding checks
33
Q

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

A
  1. Undeposited collections
34
Q

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.

A
  1. Deposits in transit
35
Q

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.

A
  1. Credit memo.
36
Q

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.

A
  1. Debit memo.
37
Q

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.

A
  1. Outstanding checks
38
Q

is the comparison of figures within the same accounting period.

A
  • Vertical analysis
39
Q
  • It is establishing relationship of the size of one account with the standard account to be compared
A

Vertical analysis

40
Q

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

A

Vertical analysis

41
Q

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

A
  • Horizontal analysis
42
Q
  • 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.
A

Horizontal analysis

43
Q
  • Computing percentages and ratios in the financial statement has no significance at all if there is no
A

interpretation, as well as recommendations,

ACCOUNTING (3 decks)

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