General Knowledge
A record in a ledger
What is an account?
BDA's occur after the trial balance and before the final reports.
When in the accounting process do BDA's occur?
All revenues and expenses are closed to this account.
What is profit or loss summary account?
An expense account (DR) which records the costs associated with sales of inventories.
What is Cost of Goods Sold?
A collection of all the accounts
What is a ledger?
Revenue is recognised when it is earned, when it has an economic benefit.
When is revenue recognised?
What are Accrued Expenses?
Profit or Loss, when determined, are closed here.
What is the Capital Account?
An asset account established to record revenues owing to the business.
What is Accrued Revenues?
The value of the business shown through assets, liabilities, owner's equity.
What does the Statement of Financial Position Record?
The basis of accounting used by most businesses to record transactions.
What is accrual accounting?
Revenues that have been earned by have not yet been received or recorded.
What are Accrued Revenues?
What is drawings?
When insurance is paid in advance it is a current asset.
What is prepaid insurance?
A statement that records the cash inflows and outflows of the business
What is the Cash Flow Statement?
The accounting period assumption
What is the assumption that assumes the life of a business is divided into arbitrary time periods.
Amounts paid and recorded as assets until they are ready to be used.
What are prepayments?
The balance of all revenue and expense accounts at 1 July.
What is zero?
A current liability account that records the tax on sales.
What is GST Collected?
The allocation of an asset over its useful life.
What is depreciation?
Entries made at balance day to match revenues and expenses
What are balance day adjustments?
Revenues received in the current accounting period but that are not be earned until the future
What are unearned revenues?
An entry made at the beginning of a new period to ensure correct amounts are taken into account.
What is a reversing entry?
A current liability where the business owes money to another party.