HBX CORe Financial Accounting Questions And
Answers|Latest Update
Balance Sheet v. income statement balance - snapshot in time
income - activity over a period
GAAP v. IFRS on Balance Sheets GAAP - current assets, non-current assets, current
liabilities, non-current liabilities, owner's equity (most liquid first) - the reverse is true for IFRS
Income Statement...gross profit, operating income, income before taxes, net income gross
= sales - COGS
operating = gross - operating expenses
income before tax = operating - non-operating exp
net income = IBT - taxes
Explicit v. Implicit Transactions explicit - triggered by an event; exchange of resources
implicit - involve judgement; no trigger; lead to adjusting entries
Adjusting Journal Entries - Accruals and Deferrals accruals - cash changes hands after
revenue or expense is recognized
deferrals - cash changes hands before
, HBX CORe Financial Accounting Questions And
Answers|Latest Update
*both support revenue recognition and match principle
Depreciation- straight line v. double declining straight line - divide gross book value by
expected useful life of asset, subtract any salvage value from gross, and add disposal costs
(net book value = gross - depreciation *land is an exception)
double - accelerated, more depreciation at first, less in the future
Selling Assets Journal entry eliminates net book value and recognizes any gain or loss
based on whether the asset sold for higher or lower than its net book value at the time of sale
Inventory Systems - FIFO, LIFO, weighted average, specific identification
Product v Period costs product - incurred to buy, manufacture, and deliver
(raw materials, parts, direct labor, supervision, overhead costs aka rent, and depreciation)
period - all others costs such as executive salaries or office rent
deferred tax assets and liabilities assets - prepaid amount of tax
liability - an amount of tax that is to be paid
Answers|Latest Update
Balance Sheet v. income statement balance - snapshot in time
income - activity over a period
GAAP v. IFRS on Balance Sheets GAAP - current assets, non-current assets, current
liabilities, non-current liabilities, owner's equity (most liquid first) - the reverse is true for IFRS
Income Statement...gross profit, operating income, income before taxes, net income gross
= sales - COGS
operating = gross - operating expenses
income before tax = operating - non-operating exp
net income = IBT - taxes
Explicit v. Implicit Transactions explicit - triggered by an event; exchange of resources
implicit - involve judgement; no trigger; lead to adjusting entries
Adjusting Journal Entries - Accruals and Deferrals accruals - cash changes hands after
revenue or expense is recognized
deferrals - cash changes hands before
, HBX CORe Financial Accounting Questions And
Answers|Latest Update
*both support revenue recognition and match principle
Depreciation- straight line v. double declining straight line - divide gross book value by
expected useful life of asset, subtract any salvage value from gross, and add disposal costs
(net book value = gross - depreciation *land is an exception)
double - accelerated, more depreciation at first, less in the future
Selling Assets Journal entry eliminates net book value and recognizes any gain or loss
based on whether the asset sold for higher or lower than its net book value at the time of sale
Inventory Systems - FIFO, LIFO, weighted average, specific identification
Product v Period costs product - incurred to buy, manufacture, and deliver
(raw materials, parts, direct labor, supervision, overhead costs aka rent, and depreciation)
period - all others costs such as executive salaries or office rent
deferred tax assets and liabilities assets - prepaid amount of tax
liability - an amount of tax that is to be paid
