GAAP's
Financial Statements & Calculations
Terminology
Transactions
Miscellaneous
100
This principle states that the affairs of the business and its' owner must be kept separate.
The business entity concept
100
What is the fundamental accounting equation?
Assets = Liabilities + Capital or Assets - Liabilities = Capital
100
The left side of an account.
debit
100
this is the process of transferring journal entries to ledger accounts.
Posting.
100
A debit in a liability account would be known as what?
An exceptional balance
200
This principle states that accounting for purchases must be made at the price paid by the purchaser.
The cost principle
200
What is the equation to find net income?
Revenue - Expenses = Net Income
200
What does HST stand for and what is the current rate?
Harmonized Sales Tax, 13%
200
Your company sold $1000 of products on account. What source document will be issued.
sales invoice
200
In this type of business, the owner is entitled to all profits or responsible for all losses.
sole proprietorship
300
Each expense item related to revenue earned must be recorded in the same accounting period as the revenue it helped earn.
The matching principle
300
What is the equation for the expanded equity section?
Beginning Capital + Net Income OR - Net Loss - Drawings = Ending Capital
300
This type of error can happen if digits are inverted.
transposition error
300
This temporary account is used in closing entries.
Income summary
300
Name 4 users of financial statements.
1) Investors 2) Government 3) Management 4) Auditors
400
This standard states that accounting must be based on clear, verifiable evidence.
The objectivity principle
400
What is the formula for straight line depreciation?
Original Cost-Salvage Value/Years of Usage
400
the ease by which assets can be converted to cash is known as this.
liquidity
400
Your company paid for goods, but not on account. What source document should be retained for your records?
cheque copy
400
What 3 things are required on every financial statement?
1) Statement type 2) Date 3) Name of the company/business
500
Accounting must take place over specific, consistent lengths of time.
The time period concept
500
What is the calculation to figure out cost of goods sold?
Beginning inventory + Purchases - Ending Inventory = COGS
500
a general ledger account which is intended to have its balance be the opposite of the normal balance for that account classification (eg accumulated depreciation is listed in the asset section but carries a credit balance)
contra account
500
The bank has refunded money to your account. What did they issue to you?
bank credit memo.
500
what is the largest expense of a merchandising business?
Cost of Goods Sold
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