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What is accumulated amortization? How is it an example of a contra account?
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definition of accured revenue
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Accounting Test 2

QuestionAnswer
What is accumulated amortization? How is it an example of a contra account? It's the allocation of long lived asset costover time It's the transfer from an asset to an expense A contra account is an account deducted/offset from its counterpart on a balance sheet or income statement Accumulated amortization offsets an account
definition of accured revenue revenues earned but not yet received in cash
understated before accured revenue overstated before accured revenue understated assets revenues
debited for accured revenue credited for accured revenue debit Credit asset revenue
definition of accured expense expenses incurred but not yet paid in cash
understated before accured expense overstated before accured expense understated expenses liabilities
debited for accured expense credited for accured expense debit Credit expense liability
definition of unearned revenue revenue gained but not earned
understated before unearned revenue overstated before unearned revenue Overstated Understated liabilities revenues
debited for unearned revenue credited for unearned revenue debit Credit liability revenue
definition of prepaid expense expenses paid for but not yet used up
understated before prepaid expense overstated before prepaid expense Overstated Understated assets expenses
debited for prepaid expense credited forprepaid expense debit Credit expense asset
Define Permanent Account an account that does not close at the end of a financial period
Define Temporary Account an account that closes at the end of a financial period
Examples Of Permanent Accounts assets capital liabilities
Where do Permanent Accounts Go balance sheet
Examples of temporary accounts revenues drawings expense
Where do temporary accounts go? income statement statement of owner's equity
Why are closing entries made? Closing entries are made to transfer the temporary accounts into permanent ones.
Explain the procedure of closing entries. 1 revenue-dr revenue accounts balances, cr income summary total revenue 2 expense-dr income summary total expense, cr expense accounts balances 3 is-close the income summary dr/cr balance, dr/cr capital 4 draw-dr capital, cr draw balance
What is a post closing trial balance? What account balances remain? A post closing trial balance is a trial balance updated after the closing entries are made. The accounts that remain are the permanent accounts. Permanent accounts are carried over to the next accounting period, they are displayed on the balance sheet
Identify the major sections of a classified balance sheet and give an example for each section. Current Assets Current Liabilities Long term investments Long-Term liabilities Property, Plant and Equipment Equity Intangible Assets
Define working capital Working capital is a liquidity ratio between current assets and current liabilities If current assets > current liabilities = company can pay its liabilities current liabilities > current assets = short term creditors may not be paid
Define current ratio. Current Ratio:liquidity ratio btwn current assets(ca)¤t liabilities(cl) Ca>cl=company can pay its liabilities cl>ca=short term creditors may not be paid Ca/cl=current ratio r:1=current ratio r=current assets current ratio is ca per $1 of cl
Explain why one measurement (wc) (cr) is considered more desirable. Current ratio is better than working capital because it shows how easily they can pay off the debts, vs the amount they loose
How to calculate use of prepaid expense cash / months it's worth = use
How to calculate earning of unearned revenue cash / amount worth = # x amount earned = earned
How to calculate intrest on a note Face value of note x annual interest rate x time in terms of 1 year = interest
How to calculate annual amortization Cost / Useful life (years) = Annual amortization Expense
How to calculate Monthly Ammortization Annual amortization Expense * months =monthly amortization
Created by: MooshroomsRCool
 

 



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