Major Field Test Business Study Guide Correct 100%

Balance Sheet - ANSWERAttempts to describe the financial condition of the firm at a point in time. Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting liabilities from assets.. Income Statement - ANSWERPresents the results of the operations of an entity over a peroid of time. Includes: Revenues, Expenses, Income, Gains & Losses Statement of Equity or Statement of Retained Earnings (Capital) - ANSWERBridges the gap between the income statement and the balance sheet. Arrangement depends on type of organization: Proprietorship: Statement of Owners Equity Partnership: Statement of Partners Equity Corporation: Statement of Stockholders Equity In addition, it contains: Investments by Owners and Distribution to owners Statement of Cash Flows - ANSWERProvides information about a company's cash receipts and cash payments during a specific period of time. Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners. Cash Basis Accounting - ANSWERRevenue is recognized in the accounting period in which the associated cash is received and Expenses are recognized in the accounting period that the cash is paid. Accrual Basis Accounting - ANSWERRevenue is recognized in the accounting period in which the revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is made, not when it is paid for.) Depreciation - ANSWERA method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. Straight-Line Deprecation - ANSWERStraight Line Depreciation - (estimated value/useful life) Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not disposed of prior to the end of estimated useful life. The value is divided among estimated life of item. Double Declining Balance Depreciation - ANSWERDouble Decli