HBX - Accounting Questions And Answers Latest Updates
1 view 0 purchase
Course
HBX - Accounting
Institution
HBX - Accounting
nominal accounts - ️️end up on the income statement and only reflect activity for a
given account period such as sales, G&A exepnse, and interest expense (go back to $0
in the next accounting period) - revenue and expenses fall here
implicit transactions - ️️(1) Recognizing expenses rela...
HBX - Accounting
nominal accounts - ✔️✔️end up on the income statement and only reflect activity for a
given account period such as sales, G&A exepnse, and interest expense (go back to $0
in the next accounting period) - revenue and expenses fall here
implicit transactions - ✔️✔️(1) Recognizing expenses related to a prepaid asset
(2) Recognizing revenues related to deferred revenue (also called unearned revenue)
(3) Accruing of unrecorded expenses
(4) Accruing of unrecorded revenues
Real accounts - ✔️✔️end up on the balance sheet and maintain a cumulative balance
over time such as cash, accounts receivable, inventory, and long term debt - assets,
liabilities, and owner's equity fall here
Assets - ✔️✔️resources owned or controlled by an entity that will produce benefits in
the future.
Be purchased at a cost that is measurable
Produce probable economic benefit in the future
Result from a past event
Be owned or controlled by the entity
Liabilities - ✔️✔️obligations to pay a third party for resources provided to an entity.
It must impose a probable economic obligation on economic resources in the future
The obligation has to be to another entity
The event that created the obligation must have occurred in the past
Owners' equity - ✔️✔️funds contributed by owners as well as profits generated by the
business
Revenue - ✔️✔️money that a business receives from providing goods or services to a
customer
Expenses - ✔️✔️the costs associated with providing goods or services to a customer
Matching principle - ✔️✔️requires that a company match its expenses to the related
revenues in the accounting period to which they relate
Is Deferred revenue an asset or a liability? - ✔️✔️Liability
, Is Prepaid expense an asset or a liability? - ✔️✔️Asset
Conservatism - ✔️✔️require that businesses choose measurement methods that
anticipate and record future losses but don't anticipate and record future gains; meant to
keep business managers from using their discretion to report overly favorable financial
results;
Reliability - ✔️✔️information faithfully represents the underlying economics; 1) info is
valid 2) info is verifiable 3) info is unbiased
Historical Cost - ✔️✔️transactions are recorded at the actual price that existed at the
time of the transaction
Consistency - ✔️✔️managers make consistent accounting choices and estimates over
time
Materiality - ✔️✔️trivial matters don't have to be recorded or reported in detail in the
financial statement
Entity concept - ✔️✔️only the business that belongs to the business should be reported
in the financial statement of a firm (example of abuse of this concept is Enron)
Money Measurement - ✔️✔️the only values that can be measured in monetary terms
get recorded in the financial statement
Going concern - ✔️✔️business will continue to operate in the foreseeable future
Owner's equity accounts - ✔️✔️anything with stock, capital, or retained earnings
revenue accounts - ✔️✔️sales, anything with revenue
expense accounts - ✔️✔️cost of goods sold, anything with expense
is a check considered cash? - ✔️✔️yes
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ACADEMICMATERIALS. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
