DECA Certification Exam Graded A+

Calculate business profit - ANSWER-Total revenue-expenses= profit Importance and methods for maintaining financial records - ANSWER-Keep track of all expenses, taxes, and good for business reports. Hire a bookkeeper, updated software system, and create a business bank account. Types of Bookkeeping Systems - ANSWER-Single entry- small and simple businesses, low volume activity, transactions are a single entry. Double entry- most businesses use, keep track of accounting needs, each acc has two columns and each transaction located two accounts, track of assets/liability accs, accurately track profits Example of double entry - ANSWER-An example of a double-entry transaction would be if the company wants to pay off a creditor. The cash account would be reduced by the amount the company owes the creditor. That would be the debit. Then, the double-entry reduces the amount the business now owes to the creditor account as it has received the amount of the credit the business is extending. That is the credit. Importance and advantage of accounting standards and principles - ANSWER-(Basic policy documents.) Main aim ensure transparency, reliability, consistency, and comparability of financial statements. Do so by standardizing accounting policies and principles of a nation/economy. So transactions of all companies recorded in similar manner if follow these accounting standards. Info reliable to investors Formula for preparing monthly cash flow statement and its key components and purpose - ANSWER-Monthly cash flow statements measure how much money is entering and leaving company, helps measure performance of company and provide info of revenue/spending. Cash flow = Cash from operating activities +(-) Cash from investing activities + Cash from financing activities. How to use credit responsibly - ANSWER- What info is on a balance sheet and what purpose does it serve - ANSWER-Company's assets, liabilities, and equity at end of accounting period. Allow business owners and investors to evaluate overall health of business, as well as its liquidity, or how easily its assets can be turned into cash. Used alongside other two financial statements: income and cash flow statement. Why is an income statement important in business and what info does it show? - ANSWER-Reports a business's revenues, expenses and overall profit or loss for a specific period of time. Doesn't just show total profit or loss company generates, also shows costs associated with earning that revenue.