MBA 510 ANSWERS AND QUESTIONS SET A+
✔✔The Chart of accounts - ✔✔a list of all ledger accounts and has an identification
number assigned to each account
✔✔T-Account - ✔✔represents a ledger account and is a tool used to understand the
effects of one or more transactions
✔✔account balance - ✔✔the difference between the total debits and the total credits in
an account
✔✔double-entry accounting - ✔✔demands the accounting equation remain in balance
✔✔journal - ✔✔complete record of each transaction in one place
✔✔journalizing - ✔✔Recording transactions in a journal
✔✔posting - ✔✔transferring information from a journal entry to a ledger account
✔✔Posting reference (PR) column - ✔✔A column in journals in which individual ledger
account numbers are entered when entries are posted to those ledger accounts.
✔✔FastForward 4 steps - ✔✔1. Identify the transaction and any source documents.
2. Analyze the transaction using the accounting equation.
3. Record the transaction in journal entry form applying double entry accounting.
4. Post the entry
✔✔Trial Balance - ✔✔a list of all ledger accounts with their balances at a point in time
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Time Period Assumption - ✔✔Presumes that the life of a company can be divided
into time periods, such as months and years.
, ✔✔annual financial statements - ✔✔reports covering a one-year period
✔✔interim financial statements - ✔✔Financial statements covering periods of less than
one year; usually based on one-, three-, or six-month periods.
✔✔fiscal year - ✔✔A 12-month period from any time
✔✔Accrual Basis Accounting - ✔✔records revenues when earned and expenses when
incurred, regardless of the timing of cash receipts or payments
✔✔Cash Basis Accounting - ✔✔records revenues when cash is received and expenses
when cash is paid
✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied
✔✔Expense Recognition Principle - ✔✔Requires recognition of expenses in the same
period as related revenues.
✔✔prepaid expenses - ✔✔expenses paid in cash before they are used or consumed
✔✔plant assests - ✔✔assets that will be used for a number of years in the operation of
a business
✔✔Unearned Revenue - ✔✔cash received before services are performed
✔✔accrued expenses - ✔✔Costs incurred in a period that are both unpaid and
unrecorded; adjusting entries for recording accrued expenses involve increasing
expenses and increasing liabilities.
✔✔unadjusted trial balance - ✔✔a list of accounts and balances prepared before
adjustments are recorded
✔✔adjusted trial balance - ✔✔a list of accounts and their balances after all adjustments
have been made
✔✔temporary accounts - ✔✔accounts used to accumulate information until it is
transferred to the owner's capital account
✔✔closing entries - ✔✔journal entries used to prepare temporary accounts for a new
fiscal period
✔✔post-closing trial balance - ✔✔A list of permanent accounts and their balances after
a company has journalized and posted closing entries.
✔✔The Chart of accounts - ✔✔a list of all ledger accounts and has an identification
number assigned to each account
✔✔T-Account - ✔✔represents a ledger account and is a tool used to understand the
effects of one or more transactions
✔✔account balance - ✔✔the difference between the total debits and the total credits in
an account
✔✔double-entry accounting - ✔✔demands the accounting equation remain in balance
✔✔journal - ✔✔complete record of each transaction in one place
✔✔journalizing - ✔✔Recording transactions in a journal
✔✔posting - ✔✔transferring information from a journal entry to a ledger account
✔✔Posting reference (PR) column - ✔✔A column in journals in which individual ledger
account numbers are entered when entries are posted to those ledger accounts.
✔✔FastForward 4 steps - ✔✔1. Identify the transaction and any source documents.
2. Analyze the transaction using the accounting equation.
3. Record the transaction in journal entry form applying double entry accounting.
4. Post the entry
✔✔Trial Balance - ✔✔a list of all ledger accounts with their balances at a point in time
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Time Period Assumption - ✔✔Presumes that the life of a company can be divided
into time periods, such as months and years.
, ✔✔annual financial statements - ✔✔reports covering a one-year period
✔✔interim financial statements - ✔✔Financial statements covering periods of less than
one year; usually based on one-, three-, or six-month periods.
✔✔fiscal year - ✔✔A 12-month period from any time
✔✔Accrual Basis Accounting - ✔✔records revenues when earned and expenses when
incurred, regardless of the timing of cash receipts or payments
✔✔Cash Basis Accounting - ✔✔records revenues when cash is received and expenses
when cash is paid
✔✔Revenue Recognition Principle - ✔✔requires that companies recognize revenue in
the accounting period in which the performance obligation is satisfied
✔✔Expense Recognition Principle - ✔✔Requires recognition of expenses in the same
period as related revenues.
✔✔prepaid expenses - ✔✔expenses paid in cash before they are used or consumed
✔✔plant assests - ✔✔assets that will be used for a number of years in the operation of
a business
✔✔Unearned Revenue - ✔✔cash received before services are performed
✔✔accrued expenses - ✔✔Costs incurred in a period that are both unpaid and
unrecorded; adjusting entries for recording accrued expenses involve increasing
expenses and increasing liabilities.
✔✔unadjusted trial balance - ✔✔a list of accounts and balances prepared before
adjustments are recorded
✔✔adjusted trial balance - ✔✔a list of accounts and their balances after all adjustments
have been made
✔✔temporary accounts - ✔✔accounts used to accumulate information until it is
transferred to the owner's capital account
✔✔closing entries - ✔✔journal entries used to prepare temporary accounts for a new
fiscal period
✔✔post-closing trial balance - ✔✔A list of permanent accounts and their balances after
a company has journalized and posted closing entries.
