financial statement

Question 1

The key product or the end product of the accounting process

Answer 1

FINANCIAL STATEMENTS

Question 2

Types of Financial Statements

Answer 2

Statement of Financial Position
Statement of Comprehensive Income
Statement of Owner`s Equity
Statement of Cash Flows

Question 3

shows the financial condition/ position of a business as of a given period.

Answer 3

Statement of Financial Position

Question 4

It consists of assets, liabilities, and capital or owner’s equity.

Answer 4

Statement of financial position

Question 5

shows the result of operations for a given period.

Answer 5

Statement of comprehensive income

Question 6

It consists of the revenue, cost, and expenses.

Answer 6

Statement of comprehensive income

Question 7

shows the changes in the capital or owner’s equity as a result of additional investment or withdrawals by the owner, plus or minus the net income or net loss for the year.

Answer 7

Statement of Changes in Owner`s Equity

Question 8

summarizes the cash receipts and cash disbursement for the accounting period.

Answer 8

Statement of cash flow

Question 9

Fundamental Accounting Equation

Answer 9

Assets=Liabilities + Owner’s Equity

Question 10

are economic resources owned by the business expected for future gain. They are property and rights of value owned by the business.

Answer 10

Assets

Question 11

include debts, obligations to pay, and claims of the creditors on the assets of the business

Answer 11

Liabilities

Question 12

includes the interest of the owners on the business, claims of the owners on the assets of the business, and the investment of the owner plus or minus the results of operations.

Answer 12

Owner’s equity or capital

Question 13

Classification of Assets

Answer 13

Current Assets
Non current Assets

Question 14

are assets that can be realized (collected, sold, used up) one year after year-end date.

Answer 14

Current assets

Question 15

are assets that cannot be realized(collected, sold, used up) one year after year-end date.

Answer 15

Non current assets

Question 16

are assets without a physical substance

Answer 16

Intangible assets

Question 17

Classification of Liabilities

Answer 17

Current liabilities
Non current liabilities

Question 18

liabilities that fall due (paid, recognized as revenue) within one year after year-end date.

Answer 18

Current liabilities

Question 19

liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date.

Answer 19

Non current liabilities

Question 20

earned or generated by the business in performing services for a client. Service Income

Answer 20

Revenue

Question 21

include all payments made to employees or workers for rendering services to a company.

Answer 21

Salary and wage expense

Question 22

is an expense related to the use of electricity, water and telecommunication facilities.

Answer 22

Utilities expense

Question 23

used by a business in the conduct of the daily operations.

Answer 23

Supplies expense covers office supplies

Question 24

is the annual portion of the cost of tangible assets such as buildings, machineries, and equipment

Answer 24

depreciation Expense

Question 25

paid on insurance coverage such as premiums paid for health and life insurance, motor vehicles, or other properties.

Answer 25

Insurance Expense

Question 26

is the amount of money charged to the borrower for the use of borrowed funds.

Answer 26

Interest expense

Question 27

Formats of the Income Statement

Answer 27

Single step Multi-step

Question 28

called ____because all revenues are listed down in one section while all expenses are listed in another.

Answer 28

single-step

Question 29

Total revenue minus total expense= Net Income

Answer 29

Single step

Question 30

called____ because there are several steps needed in order to arrive at the company`s net income.

Answer 30

multi-step

Question 31

Different income in income statement

Answer 31

Laundy income Medical fees Dental fees Legal fees Consultancy fee Audit fees Salaries and wages expense Utilities expense Supplies expense Depreciation expense Insurance expense Interest expense

Question 32

Laundry service by a laundry shop

Answer 32

Laundry income

Question 33

Medical services by a doctor

Answer 33

Medical fees

Question 34

Dental services by a dentist

Answer 34

Dental fees

Question 35

Legal services by a lawyer

Answer 35

Legal fees

Question 36

Advisory services by a consultant

Answer 36

Consultancy fees

Question 37

Accounting or auditing services by a certified public accountant

Answer 37

Audit fees

Question 38

these are rules and procedures that serve as guide in the practice of accounting. -these are standards, assumptions, and concepts with general acceptability.

Answer 38

Generally Accepted Accounting Principles (GAAP)

Question 39

comprises the methods used by a business to keep records of its financial activities and to summarize these accounts in periodic according reports.

Answer 39

Accounting system

Question 40

Fundamental Concepts

Answer 40

Entity concept Periodicty Going concern

Question 41

the business enterprise as separate and distinct from its owners and from other business enterprises.

Answer 41

Entity concept

Question 42

–is the concept behind providing financial accounting information about the economic activities of an enterprise for specified time periods.

Answer 42

Periodicity

Question 43

a twelve-month period that starts on January 1 and ends on December 31.

Answer 43

Calendar year

Question 44

a twelve-month period that starts on any month of the year other than January and ends twelve months after the starting period.

Answer 44

Fiscal year

Question 45

is a concept which assumes that the business enterprise will continue to operate indefinitely.

Answer 45

Going concern

Question 46

Basic Accounting Principles

Answer 46

Objectivity principle Historical cost Accrual principle Adequate disclosure Materiality Consistency

Question 47

states that all business transactions that will be entered in the accounting reports must be duly supported by verifiable evidence.

Answer 47

Objectivity principle

Question 48

means that all properties and services acquired by the business must be recorded at their original acquisition cost.

Answer 48

Historical cost

Question 49

states that income should be recognized at the time it is earned such as when goods are delivered or when services have been rendered.

Answer 49

Accual principle

Question 50

states that all material facts that will significantly affect the financial statements must be indicated.

Answer 50

Adequate disclosure

Question 51

this refers to the relative importance of an item or event.

Answer 51

Materiality

Question 52

means that approaches used in reporting must be uniformly employed from period to period to allow comparison of results between time periods.

Answer 52

Consistency

Question 53

an account that is closed at the end of every accounting period, amd starts a new period with a zero balance

Answer 53

Temporary account

Question 54

account with balances that carry over to the next business period.

Answer 54

Permanent account

Question 55

Types of Business Organizations

Answer 55

Sole/Single Proprietorship Partnership Corporation Cooperatives

Question 56

is a business owned and managed by only one person.

Answer 56

Sole/Single Proprietorship

Question 57

is a business organization owned managed by two or more people who agree to contribute money, property, or industry to a common fund of the purpose of earning a profit.

Answer 57

Partnership

Question 58

is a form of business organizations managed by an elected board of directors.

Answer 58

Corporation

Question 59

is an association of small producers and consumers who come together voluntarily to form a business which they own, manage, and patronize.

Answer 59

Cooperative

Question 60

Types of Business Activities

Answer 60

Service Trading/merchandising Manufacturing

Question 61

is a type of business operation engaged in the rendering of services.

Answer 61

Service

Question 62

is a type of business engaged in the buying and selling of goods.

Answer 62

Trading/ merchandising

Question 63

Why is it important to separate current assets to non current assets?

Answer 63

It is important to separate current assets to non current for managing your company's balance sheet and also helps you understand a businesses profitability and strategic success

Question 64

5 major accounts

Answer 64

Assets Liabilities Owner's equity Revenue Expenses

Question 65

Why is it important to separate current liabilities from non current liabilities?

Answer 65

It is important separate current from noncurrent liabilities for the portion long term debt listed separately to provide a more accurate view of the company's current liquidity and the company's ability to pay current liabilities as they become due.

Question 66

Asset to cash

Answer 66

Liquidity

Question 67

Why is it important to create a statement of financial position?

Answer 67

It helps reveal the financial position of a company in a particular date

Question 68

Used in a general ledger to reduce the value of a related account when the two are netted(net entry) together

Answer 68

Contra purchases