Bookkeeping Ch 1-6 Exam/55 Accurate Questions with Solved Answers

Bookkeeping Ch 1-6 Exam/55
Accurate Questions with Solved
Answers
Bookkeeping - -the activity of recording business transactions

-Double-entry bookkeeping - -a system of recording and classifying
business transactions that maintains the balance of the accounting equation

-General ledger - -the ledger that contains all of the financial accounts of a
business

-Cash receipts journal - -a special journal used to record ONLY cash receipt
transactions

-Cash disbursement journal - -is a chronological listing of all payments

SOMETIMES CALLED A CHECK REGISTER AND IS SIMILAR TO THE RECORD
KEPT FOR A PERSONAL CHECKING ACCOUNT.

-Bookkeeping - -Bookkeeping, the methodical way in which business tracts
their transactions, is rooted in accounting.
-Accounting is the total structure of records and procedures used to record,
classify, and report information about a business's financial transactions.
- Bookkeeping involves the recording of the financial information into the
accounting system while maintaining adherence to solid accounting
principles.

-Balance sheet - -Balance sheet: The financial statement that presents a
snapshot of the company's financial position (assets, liabilities, and equity)
as of a particular date in time. - It's called a balance sheet because the
things owned by the company (assets) must equal the claims against those
assets (liabilities and equity)

-Assets - -All things a company owns in order to successfully run its
business, such as cash, buildings, land, tools, equipment, vehicles, and
furniture.

-Liabilities - -All the debts the company owes, such as bonds, loans, and
unpaid bills.

, -Equity - -All the money invested in the company by its owners. In a small
business owned by one person or a group of people, the owners' equity is
shown in a Capital account.

-Retained earnings - -the accumulated earnings from a firm's profitable
operations that were reinvested in the business and not paid out to
stockholders in dividends

-Drawing account - -a temporary owner's equity account that is used when
an owner withdraws cash or other assets from the business for personal use.

-Income statement - -The financial statement that presents a summary of
the company's financial activity over a certain period of time, such a a
month, quarter, or year. The statement starts with Revenue earned,
subtracts out the Cost of Goods Sold (COGS) and the Expenses, and ends
withe the bottom line - Net Profit or Loss.

-Revenue - -Revenue: All money collected in the process of selling hte
company's goods and services. Some companies also collect revenue
through other means, such as selling assets the business no longer needs or
earning interest by offering short-term loans to employees or other
businesses.

-Cost of Goods Sold - -COGS: All money spent to purchase or make the
products or services the company plans to sell to its customers.

-Expenses - -Expenses: All money spent to operate the company that's not
directly related to the sale of individual goods or services.

-Accounting period - -a period that is typically one year; however, it can be
any length of time for which accounting records are maintained, often for a
month.

-Accounts Receivable: - -Accounts Receivable: The account used to track all
customer sales that are made by store credit. Store credit refers not to credit
card sales but rather to sales in which the customer is given credit directly
by the store and the store needs to collect payment from the customer at a
later date.

-Accounts payable - -Accounts payable: The account used to track all
outstanding bills from vendors, contractors, consultants, and any other
companies or individuals from whom the company buys goods and services.

-Depreciation - -The decline in dollar value of equipment and buildings
which have undergone obsolescence due to normal use over time.