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Bookkeeping Fundamentals Questions with correct Answers
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Bookkeeping Fundamentals
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Bookkeeping FundamentalsAssets - answerAll the things a company owns in order to successfully run its
business,such as cash,building, land, tools, equipment, vehicles and furniture
Accounting Period - answerThe time period for which financial information is being
tracked. Most businesses track their financial results on monthly basis, so each
accounting period equal one month. Some businesses choose to do financial reports on
a quarterly or annually basis. This is the tractor financial activities monthly usually also
create quarterly and annual reports.
Accounts Payable - answerThe account used to track all outstanding bills from vendors,
contractors, consultants and other companies or individuals from the company buys
goods or services
Accounts Receivable - answerThe account use to track all customer sales dinner made
by the store credit. So a credit prefers not to credit card but rather to sales in which
customers is giving credit directly by the store and the store needs to collect payment
from the customer at a later date.
Balance Sheet - answerThe financial statement that presents a snapshot of the
company's financial position as a particular day and 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).
Cost of Goods Sold (COGS) - answerAll money spent to purchase to make the product
or services companies plan to sell to its customers.
Depreciation - answerAnd accounting method used to track the aging and use of
assets. For example, if you own a car, you know that each year you use the car, it's
value is reduced (unless you're on one of those classic cars that goes up in value) .
Every major ass in a business owns ages and eventually needs replacement, including
building, factories, equipment and other key assets.
Equity - answerAll 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. In a larger business thats Incorporated , owners equity is shown in
shares of stock.
Expense - answerAll the money spent to operate the company that's not directly related
to the sale of individual goods or services .
, General Ledger - answerWhere all the companies accounts are summarized. The
general ledger is the granddaddy of the bookkeeping system
Interest - answerThe money a company needs to pay if it borrows money from a bank
or other company. For example, when you buy a car using a car loan, you must pay not
only the amount that you filed but also interest, based on a percent of the amount that
you borrowed.
Inventory - answerThe account that tracks all products that will be sold to customers.
Journals - answerWhere bookkeepers keep records (in chronological order) or daily
company transaction. Each of the most active accounts - include cash, accounts
payable, accounts receivable -has its own journal.
Liabilities - answerAll the debts the company owes, such as bonds, loan and unpaid
bills.
Payroll - answerThe way a company pays its employees. Managing payroll is a key
function of the bookkeeper and involves reporting many aspects of payroll to the
government, including taxes to be paid off the employee, unemployment taxes, and
Workmen's Compensation.
Profit & Loss - answerThe financial statements that represent a summary of the
company's financial activity over a certain period of time, such as a month, quarters, or
year. The statement starts with revenue earned, subtract the cost of good sold in the
expenses, and ends with the bottom line - Net Profit or Loss.
Revenue - answerAll money collected in the process of selling to companies goods and
services. Some companies also collect revenue through other means, such as selling
assets the business no longer needs are earning interest by offering short-term loans to
employees or other businesses.
Trial Balance - answerHow are you test to be sure the books are in balance before
putting together information for the financial reports and closing the books for the
accounting period.
What is bookkeeping - answerThe Accounting process involves a series of steps which
include analyzing , recording, summarizing, reporting, reviewing and interpreting
financial information.
Cash Basis Accounting - answerExpenses aren't recognized until the money is actually
paid out, even if the expenses are incurred in a previous months, and revenues earned
in the previous months aren't recognized until cash is actually received. Cash basis
accounting excels in tracking the actual cash available.
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