Terms

Question 0

Liabilities

Answer 0

List and total of your debts

-paid first

Question 1

Assets

Answer 1

A list and total of the things that you own that have dollar value.

Question 2

Net worth / capital / owner equity

Answer 2

The calculated difference between total assets and total liabilities

Question 3

Fundamental accounting equation

Answer 3

A-L=OE
Assets-Liabilities=Owner Equity

OR

A=L+OE

Question 4

Balance sheet

Answer 4

A statement showing the financial position of a person, business, or other organization.

Question 5

Balance sheet basis:

Answer 5

1. Balance equation
2. Three line heading(WHO? WHAT? WHEN?)
3. Assets listed in order of liquidity
4. Liabilities listed in paying order
5. Details of items are fully disclosed
6. Total assets and total liabilities recorded on same line and underlined double line.
7. Owner of business’s assets and liabilities are separate from the personal assets and liabilities.
8. Names of customers/suppliers are listed in alphabetical order.

Question 6

Liquidity

Answer 6

The order in which assets are converted to cash.
Ex.
Cash on hand-
Bank balance-
…………….
Equipment-(used in business, not usually concerted into cash)

Question 7

Accounts receivable

Answer 7

Customers who have a tab with a business with the agreement of paying it later are considered receivable accounts.
(Asset)

Question 8

Accounts payable

Answer 8

A business with an agreement with suppliers to pay debted amount later are considered payable accounts.
(Liability)

Question 9

Header

Answer 9

Must indicate the name of:
-the business(who)
>business name.
- the name of statement (what)
>statement name, balance sheet.
-the date of statement (when)
>September 30

Question 10

Sub headings

Answer 10

Write assets as one sub-heading 
-underline it 
-list them
Write liabilities as another sub-heading 
-underline it
-list them

Question 11

Totalling

Answer 11

After all liabilities and assets are listed
- Draw a line below last ones
> to indicate you are adding up figures above line.
- Write in “Total Liabilities”
>total

Question 12

Owners Equity

Answer 12

Beneath liabilities 
-Write in sub heading "Owner's Equity" 
>underline
-Write owners name, "Capital"
-Across put in equity figure
> OE=A-L
- Next line write "total liabilities and equity"
- in column put total in.
> OE+L

Question 13

Abreviations

Answer 13

• avoid using them on financial statements except when business name includes one.
• limited ‘Ltd.’ ❌
• company ‘Co’ ✔️

Question 14

Columnar paper

Answer 14

• used to carefully place figures in columns
• dollar signs, periods, and comma are not used.
• even zeros are shown by placing a dash in cents column.

Question 15

Ruled lines

Answer 15

-If you are totalling a column
>single line drawn beneath column~ total placed underneath.
-Final total has double line drawn under it.
-leave space2-3 lines
> line above number & double line under number.

Question 16

Neatness

Answer 16

• Must be neat and legible so numbers are not confused.
• does not necessarily have to be beautiful.
• accuracy
• clarity
• always use ruler

Question 17

Debtor

Answer 17

Someone who owes money to a business

Question 18

Creditors

Answer 18

Business owes money to suppliers

Question 19

Claims

Answer 19

Owners and creditors have claims against the assets of a business

• creditors first
• assets=creditors claim + owners claim

Question 20

CICA handbook

Answer 20

The standards for accountants in Canada.

Question 21

GAAP

Answer 21

Generally Accepted Accounting Principals

Question 22

Debit

Answer 22

The word associated with the left side of an account.

Question 23

Credit

Answer 23

The word associated with the right side of an account.

Question 24

Status

Answer 24

• Is the position of affairs at a particular time,

- especially in political or commercial contexts.

Question 24

Own

Answer 24

-used with a possessive to emphasize that someone or something belongs or relates to the person mentioned.

Question 24

Owe

Answer 24

-To have an obligation to pay or repay (something, especially money) in return for something received.

Question 25

Financial position

Answer 25

-Like your own financial position, a company’s financial position is defined by its assets and liabilities. A company’s financial position also includes shareholder equity. All this information is presented to shareholders in the balance sheet.

Question 26

Listing assets

Answer 26

Cash, short-term investments and inventory are examples of current assets. Long-term assets, or fixed assets, are expected to be consumed or converted to cash after one year’s time, and they are listed on the balance sheet beneath current assets.

Question 27

Liquidity order

Answer 27

Order of liquidity is the presentation of assets in the balance sheet in the order of the amount of time it would usually take to convert them into cash. Thus, cash is always presented first, followed by marketable securities, then accounts receivable, then inventory, and then fixed assets. Goodwill is listed last.

Question 28

Temperatures account

Answer 28

A temporary account is a general ledger account that begins each accounting year with a zero balance. At the end of the accounting year any balance in the account will be transferred to another account. This is referred to as closing the account.

Question 29

Revenue

Answer 29

-income, especially when of a company or organization and of a substantial nature.

Question 30

Income summary

Answer 30

The income summary account is a transitional account into which all income statement revenue and expense accounts are transferred at the end of an accounting period. The net amount transferred into the income summary account equals the net profit or loss that the business incurred during the period.

Question 31

Drawings

Answer 31

a picture or diagram made with a pencil, pen, or crayon rather than paint, especially one drawn in monochrome.

Question 32

Expenses

Answer 32

-the cost required for something; the money spent on something.

Question 33

Fixed assets

Answer 33

Fixed assets, also known as tangible assets or property, plant, and equipment (PP&E), is a term used in accounting for assets and property that cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets.

Question 34

Closing entries

Answer 34

Closing entries are journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.

Question 35

Purpose of fixed assets

Answer 35

-Reset accounts to zero

Question 36

HST

Answer 36

• Calculate
• Collect
• pay difference to government

Question 37

Underlines

Answer 37

• single for add or subtract column

- double for final total.

Question 38

Dollar sign rules

Answer 38

• Don’t use unless professional

- no $ , .

Question 39

Declining balance method

Answer 39

The normal declining-balance method of depreciation multiplies the straight-line percentage rate resulting from the useful life by a given factor. Since a relatively short useful life can produce a very large depreciation percentage rate, you can specify a maximum percentage rate as the upper ceiling limit in the declining-balance method. A similar principle applies for a very long useful life. Entering a minimum percentage rate prevents the percentage rate from sinking below a given level.

Question 40

Straight line method

Answer 40

straight line depreciation is calculated by subtracting the salvage value of the asset from the acquisition and production costs, and then dividing this amount by the useful life of the asset. SAP Business One provides two additional calculation methods.