Basic accounting
What is the accounting equation that serves as the fundamental basis for recording and analyzing all business transactions?
ASSESTS= LIABILITIES+EQUITY
A detailed projection of income and expenses over a certain period is called.
BUDGET
This document shows the difference between the bank's records and a company's cash account.
BANK RECONCILIATION STATEMENT
This is the government's compulsory charge on income, goods, or services.
TAX
These are obligations a business owes to outsiders, usually settled over time with money, goods, or services.
LIABILITIES
Which accounting principle requires that expenses be recorded in the same accounting period as the revenues they helped generate, ensuring accurate profit measurement?
MATCHING PRINCIPLE
The process of forecasting the financial results and determining how best to use the company’s money.
FINANCIAL PLANNING
This term refers to checks issued by a company but not yet cleared by the bank.
OUTSTANDING CHECKS
This type of tax is based on the income earned by individuals or corporations.
INCOME TAX
This statement shows a company's assets, liabilities, and equity at a specific point in time.
BALANCE SHEET
A company is unsure whether to record an asset at a higher estimated value or a lower conservative value. To avoid overstating its financial position, which accounting principle should guide their decision?
CONSERVATISM PRINCIPLE
This budget shows the expected cash inflows and outflows for a certain period, helping to avoid liquidity problems.
CASH BUDGET
After preparing the bank reconciliation, the accountant notices a ₱500 bank service charge reflected only on the bank statement. To update the company’s records and ensure the cash account is accurate, this process must be performed in the books.
ADJUSTING JOURNAL ENTRY
Maria buys a new cellphone in Manila for ₱20,000. When she checks the receipt, she sees that the price already includes a 12% tax on goods and services, which is passed on to the government by the seller. This type of tax is what she paid.
VALUE-ADDED TAX (VAT)
To assess liquidity, a company reviews the report that shows how much cash was generated from operating its business, how much was spent on investments, and how much came from or went to financing activities. This statement explains how cash moves in and out of the business over a given period.
STATEMENT OF CASH FLOW
A business owner wants to evaluate whether her company was profitable during the 2nd quarter of 2025. She reviews the report that details revenues earned, expenses incurred, and the resulting net income for that period. This is the financial statement she is analyzing.
INCOME STATEMENT
The management team of Delta Corp wants to see the “big picture” for next year. They combine the sales, production, cash, and expense budgets into one comprehensive financial plan that summarizes the company’s expected financial position and performance at the end of the period. This overall plan is what they prepared.
MASTER BUDGET
This bank reconciling item occurs when the bank records a deposit that the company has not yet recorded.
CREDIT MEMORANDUM (CREDIT MEMO)
This tax principle states that those who earn more should contribute a larger percentage of their income.
ABILITY-TO-PAY PRINCIPLE
When a company acquires new delivery trucks and invests in additional equipment, the payments appear in this section of the statement of cash flows, which tracks long-term asset purchases and investments.
INVESTING ACTIVITIES
An auditor is reviewing a company’s financial statements and finds no signs of liquidation or shutdown plans. Under which accounting principle can the business assume it will continue operating for the foreseeable future?
GOING CONCERN PRINCIPLE
A retail store expects higher sales during the holiday season but also anticipates large supplier payments in the same period. Which budgeting tool should the store use to plan cash inflows and outflows so it can cover expenses and avoid cash shortages?
CASH BUDGET
After reconciling the cash account, a company discovers ₱45,000 in outstanding checks, ₱30,000 in deposits in transit, a ₱2,500 bank service charge not yet recorded, and a ₱5,000 NSF check from a customer. The ledger shows a balance of ₱250,000. Considering these adjustments, this is the reconciled figure that represents the company’s true available cash.
ADJUSTED BOOK BALANCE
An employee who earns both compensation income and freelance income is preparing her records for the year 2024. To avoid penalties and surcharges, she must ensure her Annual Income Tax Return (BIR Form 1701 or 1701A) is filed on or before this date, which serves as the statutory deadline for individual taxpayers in the Philippines.
APRIL 15
After a year of operations, a company wants to summarize the changes in the owners’ capital—such as additional investments, withdrawals, and net income. Which financial statement should it prepare to show these changes?
STATEMENT OF CHANGES IN EQUITY