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Accounts and the Double-Entry System Flashcards

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1
Q

the definition of accounting

A

set of rules and methods for collecting, recording, summarizing, reporting and analyzing a company’s financial operations / translating data about a companies business transactions into useful information for decision makers

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2
Q

accounting entry also called

A

a journal entry

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3
Q

journal entry consist of how many parts

A

at least two parts that are journalized in a company’s journal for each business transactions

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4
Q

definition of source documents

A

various business papers and electronic forms that contain original information about a company’s daily business transactions

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5
Q

examples of source documents

A 
checks
receipts
invoices
purchase orders
confirmations of investment purchases and sales
premium notices
employee time sheets or time cards
policy surrender forms
claim forms
bank statement
approved policy applications
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6
Q

what is transaction progressing or book keeping?

A

the recordkeeping aspect of the accounting functions

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7
Q

business transactions recorded from a company’s source document have how many accounts classifications? and what are they?

A

5, assets, liabilities, owner’s equity, revenues, and expenses

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8
Q

chart of accounts also called?

A

the system of accounts

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9
Q

what is a chart of accounts?

A

numbered or alphabetical list of all the company’s account names

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10
Q

what is balance sheet

A

also known as a statement of financial positions or statement of financial condition. shows a company’s financial status as of a particular date

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11
Q

balance sheets consist of

A

a balance sheets summarizes what a company owns (assets), what it owes (liabilities), and its owners investment in the company (owners equity) on a specified date

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12
Q

Types of assets

A
  1. physical assets like buildings or office equipment
  2. not physical assets such as stocks and bonds
  3. amounts that are receivable or promised to be paid
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13
Q

assets for a life and health insurance company

A
  1. cash and cash equivalents
  2. bonds (issued by governmental agencies or other companies)
  3. stocks (issued by other companies)
  4. mortgage loans
  5. real estate
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14
Q
A

q

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15
Q

Assets for a simple balance sheets

A
  1. investment
  2. cash
  3. accounts receivable
  4. property
  5. equipment
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16
Q

short term assets also called

A

liquid assets

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17
Q

definition of short-term assets

A

assets that are expected to be converted into cash or consumed within the current accounting period, generally one year

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18
Q

example of short-term assets

A

cash and cash equivalent (certifications/deposits), treasury bill, commercial paper, and receivables (premiums due and reinsurance ceded)

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19
Q

definition of long term assets

A

are those that a company plans to retain for a long time to generate income, also its less liquid and not directly or easily converted into cash

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20
Q

example of long term assets

A

real estate, property, equipment, furniture, and other assets that a company intends to hold indefinitely or until maturity

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21
Q

the differences in the order of presentation between non-insurance companies and life and health insurance companies

A

for life and health insurance, insurers divide their assets between cash, invested assets and other assets.
urutannya :
- investment first (fixed securities, equity securities, stocks, bonds, and mortgage loans on real estate, other short-term investments, and other long-term investments)
- cash and cash equivalent (premium receivable)
- other short-term assets
- long-term assets

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22
Q

definition of liabilities

A

a company’s monetary values for its current and future obligations. represent demand against a company’s assets resulting from monetary commitment management has made on behalf of the company (an amount that is payable, or a promise of payment by the company to another party is a liability)

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23
Q

types of liabilities for life and health insurance companies

A
  • policy reserves (Cadangan polis)
  • claim reserves (cadangan klaim)
  • advance premiums
  • unpaid policy claims (klaim polis yg blm dibayar)
  • accounts payable (money owed by a company to its creditors)
  • notes payable (money a company owes its financiers—banks and other financial institutions)
  • agent commission payable
  • income taxes payable
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24
Q

liabilites for a simple balance sheets

A
  • policy and claim reserves
  • accounts payable
  • other liabilities
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25
the differences in the order of presentation of the liabilities between non insurance companies and life and health insurance companies`
- non-insurance companies typically list their liabilities according to maturity, which means in the order in which a company must pay them. - life and health insurance typically list their liabilities on the balance sheet according to their financial impact on the company. the liabilities for future policy benefits, which represent the largest dollar amount of an insurer's liabilities, appear first.
26
definition of short-term liabilities
debts that must be paid in one year or less
27
examples of short-term liabilities
accounts payable and salaries payable
28
definition of long-term liabilities
debts that do not have to be paid in full during the current accounting period
29
example of long-term liabilities
notes payable
30
example of a liability that is both short-term and long-term
if a company has a five-year note payable, the interest and principal portion payable within one year or less is a short-term liability, and the remaining principal will be paid in four years, it lists the rest of the note as a long-term liabilities
31
future policy benefits consist of
1. life insurance 2. annuities 3. accidents and health
32
definition of owners equity / stockholders equity
the owners investment in the company
33
typical owners equity account
1. common stocks 2. preferred stocks 3. additional paid-in capital 4. treasury stocks 5. unassigned surplus (statutory accounting) or retained earnings (GAAP)
34
persamaan dari owners equity
owners equity = assets - liabilities
35
in insurance companies, owners equity replaced with
capital and surplus
36
definition of capital and surplus
capital represents the money that a company's owners have invested in a stock insurance company and surplus is the amount that remains when an insurer subtracts its liabilities and capital from its assets.
37
types of insurers that rarely has stockholders
mutual and fraternal insureres
38
rumus dari pendapatan or net income
revenues (pendapatan) - expenses = net income
39
the differences between balance sheets and statement of operations
1. balance sheets present a company's financial position as of a single date, and the statement of operations presents the company's revenues earned and expenses incurred during an accounting period, usually a year, quarter, or month. 2. balance sheets is a static measure (only on a specific date - ex : "December 31, 1998" ) while the statement of operations is a dynamic measure (measures the moment on flow of business transactions over a specified accounting period - ex : "for the year ended December 31, 1998")
40
definition of statement of operations
reports on this profit or loss for a given period by summarizing the company's revenue and expense account for that period
41
revenues is in balance sheets or statement of operations?
statement of operations
42
definition of revenues
represent the amounts earned from a company's sales of products and services to its customers
43
typical revenues for life and health insurers
1. premium income 2. investment income 3. fee income company may also earn other revenues from leasing or renting its assets and providing services outside its normal business operations
44
what is the major source of revenue for insurance company?
policy sales or premium income
45
investment income from interest and dividends on bonds, stocks, and other investments is classified as assets or revenues?
revenue. the investment are assets, but the investment income earned on those assets is revenue
46
fee income is a result of
providing services such as third party administration services
47
an increase in revenues will make the assets....
increases too
48
expenses classified into balance sheets or statement of operations?
statement of operations
49
definition of expenses
the amount of one or more assets company uses to receive a certain benefit or service
50
expences ............. a company's assets
decrease
51
typical expenses for life and health insurance company
1. policy benefits 2. selling exenses 3. operation expenses 4. taxes, licenses, and fees
52
insurers classify expenses according to
the reason for their incurrence
53
all accounts in the policy benefits
1, annuity and policy surrenders | 2. claim and payments for life, health and disability insurance
54
accounts in selling expenses consist of
agent commission, advertising, agent training, and rent and utilities on field and branch offices related to marketing a company's products and services
55
typical operating expenses
salaries of home office employees, rent and utilities on the home office building, and home office supplies used to indirectly support the generation of revenues.
56
the double entry accounting system is
at least has two accounts, one debit and one credit for each transactions and the sum of the debits must equal to the sum of the credits for each transactions
57
the basic accounting equation or balance sheets equation
assets = liabilities + owners equity in insurance company, owners equity replaced with capital and surplus.
58
basic accounting equation with 5 accounts
assets = liabilities + owner's equity + revenues - expenses
59
a debit is
a change made to the left side of an account (in T account)
60
a credit is
a change made to the right side of an account (the T-account way)
61
an account has a debit balance when
an accounts debit exceed its credits
62
account has a credit balance when
an accounts credits exceed its debits
63
the normal balance is when
the side of the account in which increases to the account are recorded
64
debit balance account consists of (akun yang ada di kiri / di bagian debit)
assets
65
credit balance account consists of (akun yang ada di kanan / di bagian credit)
liability, owners equity, revenue accounts.
66
the rules for increases and decreases. debit will increase
assets and expenses accounts
67
debits decrease...
liabilities, owners equity, and revenues
68
credits increases....
liabilites, owners equity and revenue
69
credits decrease....
assets and expenses
70
what is compound accounting entry
is when there is more than two accounts

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