Accounting 101
Name the 5 account types.
1. Revenue
2. Expenses
3. Assets
4. Liabilities
5. Owner's Equity
These are items owned by the business that have monetary value
What are assets?
What account is used when the owner removes money from the business?
Drawings
What account types are found in the Statement of Financial Position?
Assets, Liabilities, Owner's Equity
What account types are found in the Statement of Profit or Loss
Revenue & Expenses
This is the purpose of accounting
What is to 1)identify, 2)record and 3)communicate financial information.
Name 2 ways the accounting equation can be stated.
1) Owner's Equity= Assets-Liabilities
2) Assets= Owner's Equity+Liabilities
What account is used when an item is sold on credit?
Accounts Recievable
What type of asset is a Motor Vehicle?
Non Current Asset (Property, Plant & Equipment)
What is the purpose of the Statement of Profit or Loss?
To calculate the net profit at the end of the accounting period.
Which 3 account types are included in the Accounting Equation?
Assets, Liabilities, Owner's Equity
What line on the balance sheet refers to money owed to an external party.
Accounts Payable
Invoice
What type of Liability is Accounts Payable?
Current Liability
What type of expense is a rent expense?
General & Administrative
Name the 2 main financial reports?
Statement of Financial Position
Statement of Profit or Loss
This is the difference between total assets and total liabilities.
Owner's Equity or Net Assets
On what financial statement would advertising appear?
Statement of Profit or Loss
What are the three sub classifications used for Non-Current assets?
Property, Plant & Equipment
Intangibles
Other Non-Current Assets
What type of expense is salesmen wages?
Selling Expenses
Describe the relationship between the Statement of Financial Position & the Statement of Profit or Loss.
Net Profit or Loss.
The term used to explain how quickly a company can convert assets into cash.
Liquidity
What would an increase in Sales Returns do to the Net Profit?
Decrease
Name the classified headings from a Statement of Financial Position in order.
Current Assets
Other Financial Assets
Non Current Assets
Property, Plant & Equipment (PPE)
Intangibles
Other Non-Current Assets
Current Liabilities
Non-Current Liabilities
Name the 3 classified expense headings from a Statement of Profit or Loss in order.
Selling
Administrative
Finance