- what are the four categories of adjustments? What kind of accounts are prepaid
ID: 2492084 • Letter: #
Question
- what are the four categories of adjustments? What kind of accounts are prepaid expenses and unearned revenues?
-how to correct errors in a bank reconciliation -what purpose does a bank reconciliation serve? -what is an NSF check and how is it reflected on a bank rec?
-how is CGS determined in a periodic system? what would result in an over or understatement of ending inventory? what is accumulated depreciation?
- the steps of the accounting cycle
-what does the process of posting do?
-what is the entity principle?
-how is profitability defined?
-using the same method year after year is in line with which GAAP principle?
-what is liquidity?
-what are characteristics of financial accounting?
-what is a current liability vs. long term liability? –
-what are the basic financial statements?-what exactly is a trial balance? -why are financial statements prepared?
-given info for stock – how to calculate the balance in the common stock account? -what are the differences the difference between authorized, issued, and outstanding shares of stock
-what is retained earnings?
Explanation / Answer
what are the four categories of adjustments? What kind of accounts are prepaid expenses and unearned revenues?
Answer:There are four types of account adjustments found in the accounting industry. They are accrued revenues, accrued expenses, deferred revenues and deferred expenses.
Examples of unearned revenue are:
Example of Prepaid expense:
Prepaid insurance
Prepaid rent
Supplies
the steps of the accounting cycle ?
Answer:
Accounting Cycle Steps
-what is retained earnings?
Answer:Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under shareholders' equity on the balance sheet.
what is the entity principle?
Answer: The Economic Entity Principle. The economic entity principle states that the recorded activities of a business entity will be kept separate from the recorded activities of its owner(s) and any other business entities.
-how is profitability defined?
Answer:Profitability is defined as the potential of a company to exceed its overall revenue from its total expenses which results in profit generation.
-what is liquidity?
Answer:Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it.
-what are characteristics of financial accounting?
Answer: 1) Monetary Transactions:
In financial accounting only transactions in monetary terms are considered. Transactions not expressed in monetary terms do not find any place in financial accounting, howsoever important they may be from business point of view.
2) Historical Nature:
Financial accounting considers only those transactions which are of historical nature i.e the transaction which have already taken place. No futuristic transactions find any place in financial accounting, howsoever important they may be from business point of view.
3) Legal Requirement:
Financial accounting is a legal requirement. It is necessary to maintain the financial accounting and prepare financial statements there from. It is also obligatory to get these financial statements audited.
4) External Use:
Financial accounting is for those people who are not part of decision making process regarding the organization like investors, customers, suppliers, financial institutions etc. Thus, it is for external use.
5) Disclosure of Financial Status:
It discloses the financial status and financial performance of the business as a whole.
6) Interim Reports:
Financial statements which are based on financial accounting are interim reports and cannot be the final ones.
7) Financial Accounting Process:
The process of financial accounting gets affected due to the different accounting policies followed by the accountants. These accounting policies differ mainly in two areas: Valuation of inventory and Calculation of depreciation.
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