Major Field Test Business Study Set || With complete solutions.

Balance Sheet correct answers Attempts to describe the financial condition of the firm at a point in time. Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting liabilities from assets.. Income Statement correct answers Presents the results of the operations of an entity over a peroid of time. Includes: Revenues, Expenses, Income, Gains & Losses Statement of Equity or Statement of Retained Earnings (Capital) correct answers Bridges the gap between the income statement and the balance sheet. Arrangement depends on type of organization: Proprietorship: Statement of Owners Equity Partnership: Statement of Partners Equity Corporation: Statement of Stockholders Equity In addition, it contains: Investments by Owners and Distribution to owners Statement of Cash Flows correct answers Provides information about a company's cash receipts and cash payments during a specific period of time. Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners. Cash Basis Accounting correct answers Revenue is recognized in the accounting period in which the associated cash is received and Expenses are recognized in the accounting period that the cash is paid. Accrual Basis Accounting correct answers Revenue is recognized in the accounting period in which the revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is made, not when it is paid for.) Depreciation correct answers A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. Straight-Line Deprecation correct answers Straight Line Depreciation - (estimated value/useful life) Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not disposed of prior to the end of estimated useful life. The value is divided among estimated life of item. Double Declining Balance Depreciation correct answers Double Declining Balance An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and less in the later periods.)