Final Accounts - Assignment
1, Task 1 - Accounting
Concepts and Standards
(DISTINCTION) Questions and
Answers
Accounting System - >> Correct Answer> A planned process designed to compile financial data and
summarize the results in accounting records and reports.
accrual basis of accounting - >> Correct Answer> Reporting income when earned and expenses when
incurred.
adjusting entries - >> Correct Answer> Journal entries recorded to update general ledger accounts at
the end of a fiscal period.
balance sheet - >> Correct Answer> A financial statement that reports assets, liabilities and owner's
equity on a specific date.
chart of accounts - >> Correct Answer> A list of accounts used by a business
closing entries - >> Correct Answer> Journal entries used to prepare temporary accounts for a new
fiscal period.
creditor - >> Correct Answer> A person or business to whom a liability is owed.
expense - >> Correct Answer> The cost of goods or services used to operate a business.
posting - >> Correct Answer> Transferring information from a journal entry to a ledger account.
income statement - >> Correct Answer> A financial statement showing the revenue and expenses for
a fiscal period.
, permanent accounts - >> Correct Answer> Accounts used to accumulate information from one fiscal
period to the next.
revenue - >> Correct Answer> An increase in equity resulting from the sale of goods or services
T account - >> Correct Answer> An accounting device used to analyze transactions.
temporary accounts - >> Correct Answer> Accounts used to accumulate information until it is
transferred to the owner's capital account.
trial balance - >> Correct Answer> A proof of the equality of debits and credits in a general ledger
False - >> Correct Answer> A transaction recorded in a journal is not considered a permanent record.
False - >> Correct Answer> A balance sheet reports financial information for a period of time.
True - >> Correct Answer> The source document for an electronic funds transfer is a memorandum
False - >> Correct Answer> The drawing account is a permanent account.
False - >> Correct Answer> A transaction for the sale of goods or services results in a decrease in
owner's equity.
True - >> Correct Answer> The formula for calculating net income is total revenue minus total
expenses
True - >> Correct Answer> If the previous account balance and the current entry posted to an
account are both credits, the new account balance is a credit.
True - >> Correct Answer> Adjusting entries must be posted to the general ledger accounts
True - >> Correct Answer> Temporary accounts are used to accumulate information until it is
transferred to the owner's capital account.
1, Task 1 - Accounting
Concepts and Standards
(DISTINCTION) Questions and
Answers
Accounting System - >> Correct Answer> A planned process designed to compile financial data and
summarize the results in accounting records and reports.
accrual basis of accounting - >> Correct Answer> Reporting income when earned and expenses when
incurred.
adjusting entries - >> Correct Answer> Journal entries recorded to update general ledger accounts at
the end of a fiscal period.
balance sheet - >> Correct Answer> A financial statement that reports assets, liabilities and owner's
equity on a specific date.
chart of accounts - >> Correct Answer> A list of accounts used by a business
closing entries - >> Correct Answer> Journal entries used to prepare temporary accounts for a new
fiscal period.
creditor - >> Correct Answer> A person or business to whom a liability is owed.
expense - >> Correct Answer> The cost of goods or services used to operate a business.
posting - >> Correct Answer> Transferring information from a journal entry to a ledger account.
income statement - >> Correct Answer> A financial statement showing the revenue and expenses for
a fiscal period.
, permanent accounts - >> Correct Answer> Accounts used to accumulate information from one fiscal
period to the next.
revenue - >> Correct Answer> An increase in equity resulting from the sale of goods or services
T account - >> Correct Answer> An accounting device used to analyze transactions.
temporary accounts - >> Correct Answer> Accounts used to accumulate information until it is
transferred to the owner's capital account.
trial balance - >> Correct Answer> A proof of the equality of debits and credits in a general ledger
False - >> Correct Answer> A transaction recorded in a journal is not considered a permanent record.
False - >> Correct Answer> A balance sheet reports financial information for a period of time.
True - >> Correct Answer> The source document for an electronic funds transfer is a memorandum
False - >> Correct Answer> The drawing account is a permanent account.
False - >> Correct Answer> A transaction for the sale of goods or services results in a decrease in
owner's equity.
True - >> Correct Answer> The formula for calculating net income is total revenue minus total
expenses
True - >> Correct Answer> If the previous account balance and the current entry posted to an
account are both credits, the new account balance is a credit.
True - >> Correct Answer> Adjusting entries must be posted to the general ledger accounts
True - >> Correct Answer> Temporary accounts are used to accumulate information until it is
transferred to the owner's capital account.
