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FAR-F > BOOK 1 > Flashcards

BOOK 1 Flashcards

1
Q

Account

A
  • storage unit of information
  • Three parts: Account title, debit side, credit side
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2
Q

Accounting Cycle

A
  • series of well designed steps leading to the communicaion of the effects of a business transaction
  • it implements the accounting process from time to time
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3
Q

Accounting Information System (AIS)

A

entity records, stores the financial information to retrieve and report the information in accounting statement

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4
Q

Accounting process

A

processing of financial information, recording and summarizing them in formal financial reports

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5
Q

Adjusted Trial Balance

A

Real and Nominal Accounts

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6
Q

Adjusting entries

A

entries made at the accounting period to update or bring to their correct balance

Purpose
1. to take unrecorded income and expenses of the period
2. to split mixed accounts into real and nominal

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7
Q

Advantage of Voucher System (BEF)

A
  1. better internal control over disbursement
  2. facility in taking cash discount
  3. elimination of account payable subsidiary ledger
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8
Q

Bookkeeping (Recording Phase)

A

systematic chronological recording of transactions

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9
Q

Books of Accounts Used

A

1 voucher register - records of vouchers issued for payment of cash immediately or in the future
2. check register - records of all cash payments
3. sales register - records all sale of merchandise
4. cash receipts journal - records all receipts of journal

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10
Q

Closing the books

A

process of preparing closing entries and ruling and balancing real accounts to carried forward to the next accounting period

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11
Q

Direct matching approach

A

determination of the results of operations or financial performance of an entity in a specific period of time

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12
Q

Disadvantage of Voucher System

A
  1. lacks flexibility
  2. may result in duplication of work and increased bookkeeping expenses
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13
Q

Double entry bookkeeping

A
  • having two fold effect in accounting values

2 Principles
1. principle of duality
2. principle of equality (equilibrium)

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14
Q

Errors not revealed by the TB

A
  1. wrong computation
  2. wrong classification of account
  3. omission in journalizing
  4. omission or error in both sides
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15
Q

Errors revealed by the TB

A
  1. Error of Transplacement - 450 to 4,500
  2. Error of Transposition - 59 to 95
  3. Error in posting one side
  4. Omission in posting one side
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16
Q

FS of double entry

A
  1. SFP
  2. SCI
  3. SCF
  4. SCE
  5. NFS
17
Q

FS of single entry

A
  1. Statement of assets, liab, and net worth (SALN)
  2. summary of changes in equity
18
Q

Indirect or Residual approach

A

determination of results of operation using capital or net assets at the end of the year is compared with capital or net assets at the beginning of the year, taking into consideration owner related transactions during the period

19
Q

Journal

A
  • Formal record or book of original entry

Simple journal - all transctions are recorded in only one book
Special journal - particular types of transactions are recorded

20
Q

Kinds of Ledger

A
  1. General Ledger - contains all account
  2. Private ledger - contains confidential information
  3. Subsidiary ledger - consists of group of accounts of similar nature, has an agreement with the controlling account
21
Q

Ledger

A

systematic compilation of a group of accounts

22
Q

Phase
of the financial accounting process

A
  1. recording phase
  2. summarizing phase
23
Q

Recording Phase

A

identifying, analyzing, journalizing, and posting

24
Q

Reversing Entries (optional step)

A
  1. for conveniece in recording accruals
  2. for consistency in recording deferrals
    - accrued expense
    - prepaid expense - expense method
    - unearned income - income method
25
Q

What is single entry bookkeeping (incomplete bookkeeping)

A

only cash and personal accounts are recognized

Principle:
1. One phase of transaction (give or receive cash)

Cashbook - daybook
Personal or People accounts - accounts receivable
Subsidiary ledger - accounts payable and owners equity

26
Q

Steps in Accounting Cycle

A
  1. Identifying and Analyzing transactions
  2. Journalizing
  3. Posting
  4. Unadjusted TB
  5. Adjusting entries
  6. Adjusted TB
  7. FS
  8. Closing entries
  9. Post-closing TB
  10. Reversing Entries
27
Q

Summarizing Phase

A

preparation of Unadjusted TB Adjusting entries, FS, closing entries, post closing TB and reversing entries

28
Q

Voucher

A
  • document that carries the authorization to pay cash either immediately or in the future

2 Basic Principle
1. all cash payment should go through a voucher
2. no voucher can be presented for payment twice

29
Q

Voucher system

A
  • special method that involves the payment of cash immediately or in the future
  • means of establishing internal control over expenditure
30
Q

who uses single entry

A
  1. micro entities
  2. small entities
  3. practicing professionals
  4. non profit org
31
Q

Who uses double entry

A
  1. all reporting enterprises
  2. large, publicly accountable entities
  3. medium entities
  4. small entities

FAR-F (4 decks)

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