ACCT 201 Case Spring 2018 Page 11 7. Identify each term definition below: .a. Ob

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ACCT 201 Case Spring 2018 Page 11 7. Identify each term definition below: .a. Obligations that the company expects to pay after one year b. Principle that requires that companies include in the accounting records only transoction data that con be expressed in terms of money c.Cost of assets consumed or services used in the process of earning revenue d. The entire group of accounts maintained by a company e. List the four financial statements _ f. List of general ledger occounts and ther balances at agnen tme. - g. The right side of an account h. Amounts owed by customers that result from the sale of goods and services i. Goods held for sale to customers j. The process of comparing the bonks balance of an account to the company's balance and explaining any differences to make them agree. k A dishonest act by an employee thet results in personal benefit to the employee at a cost to the employer L List the three types of temporary (nominal) accounts m. Revenues and expenses and goins and losses that are unrelated to the Compony's main operations n Process of allocating the cost of a plant asset to expense over its useful life

Explanation / Answer

question-7

answer -

(a) Obligations that a company expects to pay after one year is Long-term Liabilities because there is a outflow of funds and the funds are moved out of the after 1 year. (Liability means outflow of funds for a future economic benefit)

(b) The monetary unit assumption principle is the that requires that companies include in the accounting records only transaction data that can be expressed in terms of money.

(c) The cost of assets consumed or services used in the process of generating revenues are called expenses. some of the examples of such type of expenses are Selling, general, and administrative expenses.

(d) The entire group of accounts maintained by a company is called Ledger.

(e) Four financial statements from the list of FS are as follows:-

(i) Income Statement - A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.

(ii) Retained earnings statement - A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time.Indicates amount paid out in dividends and amount of net income or net loss for period.

(iii) Balance sheet - A financial statement that reports the assets and claims to those assets at a specific point in time. Presents a picture at a point in time of what a business owns and what it owes.

(iv) Statement of cash flows - A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time. Shows sources of cash during a period of time and how the cash was used.

(f) A trial balance is a list of accounts and their balances at a given time. A trial balance may uncover errors in journalizing,posting and useful in the preparation of financial statements.

(g) The Basic form of account where credit will be on right side.

(h) amounts owed from customers that result from the sale of goods or services is called as Accounts Receivable.

(i) The goods which are held for sale to customers in the ordinary course of business are called as Stock/Inventory.

(j) Bank Reconsiliation Statement is a statement that explains the differences between bank account as per books of accounts and statement as per bank pass book.

(k) A fraud is a dishonest act by an employee that results in personal benefit to the employee at a cost to the employer.

(l) List of three types of temporary(nominal) accounts are :-

(i) Revenues (ii) Expenses (iii) Dividends

(m) Revenues, expenses, gains, and losses that araise from nonoperating activities are unrelated to a company's main line of operations.

(n) The process of allocating the cost of a plant asset to expense over it's useful life is called as Depreciation.

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