Questions Flashcards
The balance sheet reports what?
ALE – Assets, Liabilities and Equity
What is the fundamental formula of accounting
Assets = Liabilities + Equity
What is a journal? (79)
The chronological accounting entry
What is ledger?
The book of accounts and their balances (group of all T-accounts)
What is posting?
Copying amounts from the journal to the ledger
Which accounts have the adverse sign for T-Account?
ADE – Assets, Dividends, and Expenses / EXADI Ex-cola de Administração
What is a trial balance
A list of all the ledger accounts with their balances
What is the formula for analysing accounts?
X = Beginning balance + Sales - Ending balance
What is the revenue principle?
When and how much of revenue should we record. We should recognize revenue after it was earned – and not before (when the business does the service, and not when it receives cash).
How much? The equivalent of the service provided to the customer.
What is the Expense Recognition Principle?
Identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues of the same period.
What is the Expense Recognition Principle?
Identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues of the same period.
How should prepaid expense be recorded?
As a liability.
How should prepaid expense be recorded?
Until the good is delivered, prepaid expense should be recorded as an asset.
Order of financial statements
IRB-C (Instituto de Resseguros do Brasil/Chile) -
INCOME STATEMENT, Statement of RETAINED earnings, BALANCE sheet, Statement of CASH flow
Formula for income statement
Revenue - Expense = Net Income
