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Bookkeeping Ch 1-6 Exam Questions and Answers
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Bookkeeping Ch 1-6 Exam Questions and Answers
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Bookkeeping Ch 1-6 Exam Questionsand Answers
Bookkeeping - Answer -the activity of recording business transactions
Double-entry bookkeeping - Answer -a system of recording and classifying business
transactions that maintains the balance of the accounting equation
General ledger - Answer -the ledger that contains all of the financial accounts of a
business
Cash receipts journal - Answer -a special journal used to record ONLY cash receipt
transactions
Cash disbursement journal - Answer -is a chronological listing of all payments
SOMETIMES CALLED A CHECK REGISTER AND IS SIMILAR TO THE RECORD
KEPT FOR A PERSONAL CHECKING ACCOUNT.
Bookkeeping - Answer -Bookkeeping, the methodical way in which business tracts their
transactions, is rooted in accounting.
-Accounting is the total structure of records and procedures used to record, classify, and
report information about a business's financial transactions.
- Bookkeeping involves the recording of the financial information into the accounting
system while maintaining adherence to solid accounting principles.
Balance sheet - Answer -Balance sheet: The financial statement that presents a
snapshot of the company's financial position (assets, liabilities, and equity) as of a
particular date in time. - It's called a balance sheet because the things owned by the
company (assets) must equal the claims against those assets (liabilities and equity)
Assets - Answer -All things a company owns in order to successfully run its business,
such as cash, buildings, land, tools, equipment, vehicles, and furniture.
Liabilities - Answer -All the debts the company owes, such as bonds, loans, and unpaid
bills.
Equity - Answer -All the money invested in the company by its owners. In a small
business owned by one person or a group of people, the owners' equity is shown in a
Capital account.
, Retained earnings - Answer -the accumulated earnings from a firm's profitable
operations that were reinvested in the business and not paid out to stockholders in
dividends
Drawing account - Answer -a temporary owner's equity account that is used when an
owner withdraws cash or other assets from the business for personal use.
Income statement - Answer -The financial statement that presents a summary of the
company's financial activity over a certain period of time, such a a month, quarter, or
year. The statement starts with Revenue earned, subtracts out the Cost of Goods Sold
(COGS) and the Expenses, and ends withe the bottom line - Net Profit or Loss.
Revenue - Answer -Revenue: All money collected in the process of selling hte
company's goods and services. Some companies also collect revenue through other
means, such as selling assets the business no longer needs or earning interest by
offering short-term loans to employees or other businesses.
Cost of Goods Sold - Answer -COGS: All money spent to purchase or make the
products or services the company plans to sell to its customers.
Expenses - Answer -Expenses: All money spent to operate the company that's not
directly related to the sale of individual goods or services.
Accounting period - Answer -a period that is typically one year; however, it can be any
length of time for which accounting records are maintained, often for a month.
Accounts Receivable: - Answer -Accounts Receivable: The account used to track all
customer sales that are made by store credit. Store credit refers not to credit card sales
but rather to sales in which the customer is given credit directly by the store and the
store needs to collect payment from the customer at a later date.
Accounts payable - Answer -Accounts payable: The account used to track all
outstanding bills from vendors, contractors, consultants, and any other companies or
individuals from whom the company buys goods and services.
Depreciation - Answer -The decline in dollar value of equipment and buildings which
have undergone obsolescence due to normal use over time.
General Ledger - Answer -the ledger that contains all of the financial accounts of a
business
Interest - Answer -...
Interest - Answer -Interest: The money a company needs to pay if it borrows money
from a bank or other company
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