Accounting Exam Questions.
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Each transaction a company records in its books will
How do transactions affect different accounts, but because it has equal and
impact the Balance Sheet opposite effects, it will not upset the balance sheet
equation? equation. This has to do with the double-entry
bookkeeping method.
It's a fundamental concept in accounting, determining
What does the double
that every transaction will be recorded with an equal
entry bookkeeping
and opposite effect in at least two different accounts.
determine? What equation
The concept is directly related to the BS accounting
is it directly related to?
equation, that is always balanced due to it
What is the difference The balance sheet represents the ID of a company,
between the balance assets, liabilities and equity at a given point in time.
sheet and income The income statement details the company's financial
statement? results over a entire specified accounting period
It's reported once every accounting period and
What does the income details the companies financial results for that entire
statement represent? specific accounting period. It includes revenues and
expenses
The financial statement is prepared on an accrual
basis. Transactions are recognized on their
What is the accrual basis
occurrence rather than when cash is received. The
accounting? How is it
point is to provide readers of financial statements with
different from cash base
information about a company's commitment to pay or
accounting?
receive cash. A reflective measure of revenues earned
and expenses incurred
, Revenue recognition does not necessarily occur
When is revenue when the cash is transferred, it is recognized on an
recognized (Revenue accrual basis, normally over the period when the
recognition principle)? service is rendered, or when the good is sold and
delivered
Depreciation of an asset starts when it's in place and
in condition for use. The period over which the asset is
When does depreciate
depreciated is its service life (which does not have to
start and over what
equal its physical life). The service life of an asset is
period?
the period over which a company plans on using and
benefiting from the asset
Depreciation is the allocation of an assets cost to the
accounting period benefited the use of such asset, it
is not valuation. The depreciation is done through a
What sorts of assets are method simply representing the pattern in which the
depreciated and why? cost is allocated to each of the periods involved in
the service life. Fixed assets, such as PPE assets, that
have a service life are depreciated (for example, a
machine)
Net working capital is a financial measurement of the
What is net working company's short term financial health and liquidity.
capital? What does a Current assets - current liabilities . A relatively high
relatively high one NWC suggest the company is in a good financial
suggest? place in the short term, it can invest and grow and pay
back creditors
With which assets is the Inventory. Inventory must be presented at the lower
Net Realizable value of cost and NRV. It is checked by comparing it to the
associated with and how? market value at the end of each reporting period
A unique unidentifiable, intangible, asset that arises
out of a business acquisition. It reflects the excess of
What is a goodwill asset? fair value of an acquired entity over the net of the
amount assigned to identifiable assets acquired, and
liabilities assumed
Save Groups
Each transaction a company records in its books will
How do transactions affect different accounts, but because it has equal and
impact the Balance Sheet opposite effects, it will not upset the balance sheet
equation? equation. This has to do with the double-entry
bookkeeping method.
It's a fundamental concept in accounting, determining
What does the double
that every transaction will be recorded with an equal
entry bookkeeping
and opposite effect in at least two different accounts.
determine? What equation
The concept is directly related to the BS accounting
is it directly related to?
equation, that is always balanced due to it
What is the difference The balance sheet represents the ID of a company,
between the balance assets, liabilities and equity at a given point in time.
sheet and income The income statement details the company's financial
statement? results over a entire specified accounting period
It's reported once every accounting period and
What does the income details the companies financial results for that entire
statement represent? specific accounting period. It includes revenues and
expenses
The financial statement is prepared on an accrual
basis. Transactions are recognized on their
What is the accrual basis
occurrence rather than when cash is received. The
accounting? How is it
point is to provide readers of financial statements with
different from cash base
information about a company's commitment to pay or
accounting?
receive cash. A reflective measure of revenues earned
and expenses incurred
, Revenue recognition does not necessarily occur
When is revenue when the cash is transferred, it is recognized on an
recognized (Revenue accrual basis, normally over the period when the
recognition principle)? service is rendered, or when the good is sold and
delivered
Depreciation of an asset starts when it's in place and
in condition for use. The period over which the asset is
When does depreciate
depreciated is its service life (which does not have to
start and over what
equal its physical life). The service life of an asset is
period?
the period over which a company plans on using and
benefiting from the asset
Depreciation is the allocation of an assets cost to the
accounting period benefited the use of such asset, it
is not valuation. The depreciation is done through a
What sorts of assets are method simply representing the pattern in which the
depreciated and why? cost is allocated to each of the periods involved in
the service life. Fixed assets, such as PPE assets, that
have a service life are depreciated (for example, a
machine)
Net working capital is a financial measurement of the
What is net working company's short term financial health and liquidity.
capital? What does a Current assets - current liabilities . A relatively high
relatively high one NWC suggest the company is in a good financial
suggest? place in the short term, it can invest and grow and pay
back creditors
With which assets is the Inventory. Inventory must be presented at the lower
Net Realizable value of cost and NRV. It is checked by comparing it to the
associated with and how? market value at the end of each reporting period
A unique unidentifiable, intangible, asset that arises
out of a business acquisition. It reflects the excess of
What is a goodwill asset? fair value of an acquired entity over the net of the
amount assigned to identifiable assets acquired, and
liabilities assumed
