HL2601
Assignment 10
2024 | Due 10
October 2024
Accelerated Depreciation Methods - ANSWER ✓✓✓Depreciation
methods that recognize more depreciation expense in the early
years and less in the later years. Double-declining balance is an
example of an accelerated depreciation method. Accounting
Equation - ANSWER ✓✓✓Assets = Liabilities + Owners' Equity.
This equation is fundamental and must always be true in double
entry accounting. Accounting Period - ANSWER ✓✓✓The period
of time for which the financial results are reported; typically either
,a month or a quarter or a year. Accounts Payable - ANSWER ✓✓
✓Liability account used to show the obligation to pay suppliers who
have provided goods or services on credit terms. Accounts Payable
Turnover - ANSWER ✓✓✓Accounts Payable Turnover is a ratio
that is used to measure how efficiently a business is paying its
vendors. It is calculated by dividing the credit purchases for the
period by the average accounts payable balance for the period. In
the absence of credit purchases information, we may use cost of
goods sold as a substitute. The ratio represents how many times the
accounts payable turned over during the period. For most ratios in
this course, we use averages when calculating ratios with balance
sheet numbers, but this is not necessary and some may choose to
use beginning or ending balances. Accounts Receivable - ANSWER
✓✓✓Asset account used to show the claim to receive cash at some
future date for goods or services that have been supplied to a
customer on credit terms. Accounts Receivable Turnover - ANSWER
✓✓✓Accounts Receivable Turnover is a ratio that is used to
measure how efficiently a business is collecting receivables from its
customers. It is calculated by dividing the credit sales for the period
by the average accounts receivable balance for the period. In the
absence of credit sales information, we may use total sales as a
substitute. The ratio represents how many times the accounts
receivable turned over during the period. For most ratios in this
course, we use averages when calculating ratios with balance sheet
numbers, but this is not necessary and some may choose to use
beginning or ending balances. Accrual - ANSWER ✓✓✓A revenue
amount that is recorded after the revenue is earned but before the
payment is received or an expense amount that is recorded after it
has been incurred but before the payment has been made. In either
case, for an accrual the exchange of cash is expected at some future
point after the initial revenue or expense is recognized. Accrual
Accounting Method - ANSWER ✓✓✓This is the accounting method
,taught in this course, followed by most companies, and required
under US GAAP and IFRS. The method follows the revenue
recognition principle, which says that revenue should be recognized
in the period in which it is earned and realizable, not necessarily
when the cash is received and the matching principle which says
that expenses should be recognized in the period in which the
related revenue is recognized rather than when the related cash is
paid. Accrued Expenses - ANSWER ✓✓✓Liability account used to
record amounts at the end of an accounting period to recognize
expenses that were incurred in the period but for which no invoice
has yet been received nor payment has yet been made. Examples
are salaries/wages payable, accrued rent expense, accrued legal fees.
When the accrual is made, the debit is to the appropriate expense
account (payroll expense, rent expense, legal expense) and the
credit is to the accrued expense account, which is a liability because
it represents an obligation which will need to be paid in the future.
Remember accrued expenses are NOT expenses. Accrued Liability -
ANSWER ✓✓✓Liability accounts that record expenses that have
been recognized on the income statement but have not yet been
paid. Similar to accrued expenses. Accrued Payroll - ANSWER ✓✓
✓An accrued expense recorded at the end of a financial period for
amounts of payroll that have been worked but not yet paid. It is a
common type of accrued expense. See also Salaries/Wages Payable.
Accrued Revenue - ANSWER ✓✓✓An asset account that records
revenue that has been earned and recognized on the income
statement but not yet paid for by the customer. At the time of the
accrual, we debit the receivable account and credit the appropriate
accrued revenue account. When the cash transfer ultimately occurs,
we debit the cash account and credit the receivable account.
Accumulated Depreciation - ANSWER ✓✓✓A contra asset account
that includes the cumulative total of all depreciation expenses
recorded to date for specific assets. The credit balance in this
, account offsets the debit balance in the asset account which shows
the original value of the asset. When the original asset value is
netted against the accumulated depreciation for the asset you
arrive at the net book value of the asset. Accumulated other
comprehensive income - ANSWER ✓✓✓An equity account that
consists of cumulative unrealized gains or losses on line items
classified under other comprehensive income. It includes items such
as unrealized gains or losses on investments available for sale,
foreign currency gains or losses, and pension plan gains or losses.
Adjusting (Journal) Entries - ANSWER ✓✓✓Entries made to
adjust the balances of asset and liability accounts to reflect changes
in their values due to the passage of time or another implicit
transaction. Allowance for Doubtful Accounts - ANSWER ✓✓✓A
contra asset account that nets against Accounts Receivable. It is
generally set up as an estimate of accounts that will ultimately
prove to be uncollectible. It is then reduced when accounts are
written off. It may be adjusted at period end to reflect any
updated estimates. May also be referred to as Reserve for Bad
Debts. Amortization - ANSWER ✓✓✓The method for recognizing
the expense of long-lived intangible assets such as patents,
copyrights, and brands, over the life of the assets. Amortization is
usually calculated similar to straight-line depreciation. Some
companies use an accumulated amortization account, while other
companies may directly reduce the value of the associated asset.
Annuity - ANSWER ✓✓✓An investment where the purchaser
receives the right to receive a fixed amount each year for a lifetime
or for a certain number of years. Asset - ANSWER ✓✓✓A resource
that is owned or controlled by a business and is expected to provide
some future economic benefit to the business. Examples include cash,
inventory, and equipment. The business expects that its assets will
help to produce cash inflow in the future. Asset Turnover -
ANSWER ✓✓✓Asset Turnover is calculated by dividing the total
Assignment 10
2024 | Due 10
October 2024
Accelerated Depreciation Methods - ANSWER ✓✓✓Depreciation
methods that recognize more depreciation expense in the early
years and less in the later years. Double-declining balance is an
example of an accelerated depreciation method. Accounting
Equation - ANSWER ✓✓✓Assets = Liabilities + Owners' Equity.
This equation is fundamental and must always be true in double
entry accounting. Accounting Period - ANSWER ✓✓✓The period
of time for which the financial results are reported; typically either
,a month or a quarter or a year. Accounts Payable - ANSWER ✓✓
✓Liability account used to show the obligation to pay suppliers who
have provided goods or services on credit terms. Accounts Payable
Turnover - ANSWER ✓✓✓Accounts Payable Turnover is a ratio
that is used to measure how efficiently a business is paying its
vendors. It is calculated by dividing the credit purchases for the
period by the average accounts payable balance for the period. In
the absence of credit purchases information, we may use cost of
goods sold as a substitute. The ratio represents how many times the
accounts payable turned over during the period. For most ratios in
this course, we use averages when calculating ratios with balance
sheet numbers, but this is not necessary and some may choose to
use beginning or ending balances. Accounts Receivable - ANSWER
✓✓✓Asset account used to show the claim to receive cash at some
future date for goods or services that have been supplied to a
customer on credit terms. Accounts Receivable Turnover - ANSWER
✓✓✓Accounts Receivable Turnover is a ratio that is used to
measure how efficiently a business is collecting receivables from its
customers. It is calculated by dividing the credit sales for the period
by the average accounts receivable balance for the period. In the
absence of credit sales information, we may use total sales as a
substitute. The ratio represents how many times the accounts
receivable turned over during the period. For most ratios in this
course, we use averages when calculating ratios with balance sheet
numbers, but this is not necessary and some may choose to use
beginning or ending balances. Accrual - ANSWER ✓✓✓A revenue
amount that is recorded after the revenue is earned but before the
payment is received or an expense amount that is recorded after it
has been incurred but before the payment has been made. In either
case, for an accrual the exchange of cash is expected at some future
point after the initial revenue or expense is recognized. Accrual
Accounting Method - ANSWER ✓✓✓This is the accounting method
,taught in this course, followed by most companies, and required
under US GAAP and IFRS. The method follows the revenue
recognition principle, which says that revenue should be recognized
in the period in which it is earned and realizable, not necessarily
when the cash is received and the matching principle which says
that expenses should be recognized in the period in which the
related revenue is recognized rather than when the related cash is
paid. Accrued Expenses - ANSWER ✓✓✓Liability account used to
record amounts at the end of an accounting period to recognize
expenses that were incurred in the period but for which no invoice
has yet been received nor payment has yet been made. Examples
are salaries/wages payable, accrued rent expense, accrued legal fees.
When the accrual is made, the debit is to the appropriate expense
account (payroll expense, rent expense, legal expense) and the
credit is to the accrued expense account, which is a liability because
it represents an obligation which will need to be paid in the future.
Remember accrued expenses are NOT expenses. Accrued Liability -
ANSWER ✓✓✓Liability accounts that record expenses that have
been recognized on the income statement but have not yet been
paid. Similar to accrued expenses. Accrued Payroll - ANSWER ✓✓
✓An accrued expense recorded at the end of a financial period for
amounts of payroll that have been worked but not yet paid. It is a
common type of accrued expense. See also Salaries/Wages Payable.
Accrued Revenue - ANSWER ✓✓✓An asset account that records
revenue that has been earned and recognized on the income
statement but not yet paid for by the customer. At the time of the
accrual, we debit the receivable account and credit the appropriate
accrued revenue account. When the cash transfer ultimately occurs,
we debit the cash account and credit the receivable account.
Accumulated Depreciation - ANSWER ✓✓✓A contra asset account
that includes the cumulative total of all depreciation expenses
recorded to date for specific assets. The credit balance in this
, account offsets the debit balance in the asset account which shows
the original value of the asset. When the original asset value is
netted against the accumulated depreciation for the asset you
arrive at the net book value of the asset. Accumulated other
comprehensive income - ANSWER ✓✓✓An equity account that
consists of cumulative unrealized gains or losses on line items
classified under other comprehensive income. It includes items such
as unrealized gains or losses on investments available for sale,
foreign currency gains or losses, and pension plan gains or losses.
Adjusting (Journal) Entries - ANSWER ✓✓✓Entries made to
adjust the balances of asset and liability accounts to reflect changes
in their values due to the passage of time or another implicit
transaction. Allowance for Doubtful Accounts - ANSWER ✓✓✓A
contra asset account that nets against Accounts Receivable. It is
generally set up as an estimate of accounts that will ultimately
prove to be uncollectible. It is then reduced when accounts are
written off. It may be adjusted at period end to reflect any
updated estimates. May also be referred to as Reserve for Bad
Debts. Amortization - ANSWER ✓✓✓The method for recognizing
the expense of long-lived intangible assets such as patents,
copyrights, and brands, over the life of the assets. Amortization is
usually calculated similar to straight-line depreciation. Some
companies use an accumulated amortization account, while other
companies may directly reduce the value of the associated asset.
Annuity - ANSWER ✓✓✓An investment where the purchaser
receives the right to receive a fixed amount each year for a lifetime
or for a certain number of years. Asset - ANSWER ✓✓✓A resource
that is owned or controlled by a business and is expected to provide
some future economic benefit to the business. Examples include cash,
inventory, and equipment. The business expects that its assets will
help to produce cash inflow in the future. Asset Turnover -
ANSWER ✓✓✓Asset Turnover is calculated by dividing the total
