WK1 S

Question 1

Bookkeeping

Answer 1

The process of recording financial transactions and the preparation of financial statements

Question 2

Sole proprietorship

Answer 2

A unincorporated business owned by 1 person (business and owner are considered the same with respect to taxes, liability and legally)

Question 3

Partnership

Answer 3

A unincorporated business owned by 2+ ppl, there is no separation between the business and owner ie tax, liability, legally

Question 4

Corporation

Answer 4

A separate legal entity registered with revenue Canada + federal or provincial government

Question 5

Debit

Answer 5

An amount recorded on the left side of the account.

Question 6

Credit

Answer 6

An amount recorded on the right
side of the account.

Question 7

Balance sheet

Answer 7

A statement show the financial position, assets, liabilities and equity of individual or business at a certain point in time

Question 8

Assets

Answer 8

Anything owned that has a dollar value

Question 9

Liabilities

Answer 9

Debt

Question 10

Equity

Answer 10

The difference between assets and
liabilities

Question 11

Current Assets

Answer 11

Cash or other assets that will be used within one year

Question 12

Cash

Answer 12

Coins, currency, money orders, cheques, drafts.

Question 13

Accounts Receivable (AR)

Answer 13

Money that is owed to a
business from its customers

Question 14

Inventory

Answer 14

Goods on hand for sale or use in the production process

Question 15

Supplies

Answer 15

Materials used in conducting the daily operations of a business. (i.e. Stationary)

Question 16

Prepaid Expense

Answer 16

Amounts paid for services not yet
received (i.e. last month rent, security deposit)

Question 17

Current Liabilities

Answer 17

Claims against a business that will be satisfied within one year

Question 18

Accounts Payable (AP)

Answer 18

Money that the business owes creditors/suppliers

Question 19

Short-Term Debt

Answer 19

Debt that will be paid within one year

Question 20

Long-Term Debt

Answer 20

Debt that will not be satisfied within one year

Question 21

Income Statement

Answer 21

Financial report showing all income and expenses for a period of time.

Question 22

Revenue

Answer 22

Also known as sales or income. An increase in equity as a result of business activity

Question 23

Expenses

Answer 23

A decrease in equity as a result of business activity

Question 24

Net Income

Answer 24

Revenue after Expenses for an accounting period

Question 25

Journal

Answer 25

Specially ruled paper in which accounting entries are recorded in the order in which they occur. The transaction is recorded in the journal, before it is recorded in the ledger.

Question 26

Journal Entry

Answer 26

An accounting entry in the journal

Question 27

Ledger

Answer 27

A book in which accounts are kept; used to refer to the entire set of accounts

Question 28

Posting

Answer 28

Entering information from the journal into the ledger

Question 29

Double Entry System

Answer 29

System of accounting where every transaction is recorded both as a
debit in one account and a credit in another account. Meaning total debits will ALWAYS equal the total credits.

Question 30

Chart of Accounts

Answer 30

List of the a business’ accounts of and their numbers

Question 31

Trial Balance

Answer 31

A listing of all account balances in the ledger for the purpose of ensuring that the total debits equal the total credits

Question 32

Balance Sheet Equation

Answer 32

Assets – Liabilities = Equity

Question 33

Error - Transposition

Answer 33

Mistake caused by interchanging digits when transferring from one place to another. Such an error is always evenly divisible by 9. Ex 12 = 21

Question 34

Slide

Answer 34

Moving the decimal point in error
Ex 12.0 = 1.20

Question 35

What does EARLE stand for?

Answer 35

Expenses
Assets
Revenue
Liabilities
Equity

Question 36

How do you use EARLE

Answer 36

ExAss|RLEq
D - Up|C - UP