NR 602 Final Review Exam/ Questions & Collect Answers Latest Update 2025
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Financial Accounting Unit 1 Study G
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Financial Accounting Unit 1 Study G
NR 602 Final Review Exam/ Questions & Collect Answers Latest Update 2025
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Financial Accounting Unit 1 Study Guide
Latest Update 2025
Accounts receivable (AR) is the balance of money due to a firm for goods or services
delivered or used but not yet paid for by customers. Accounts receivables are listed on
the balance sheet as a current asset. AR is any amount of money owed by customers
for purchases made on credit.
The key role of an employee who works as an Accounts Receivable is to ensure their
company receives payments for goods and services, and records these transactions
accordingly. An Accounts Receivable job description will include securing revenue by
verifying and posting receipts, and resolving any discrepancies.
The accounts payable department's main responsibility is to process and review
transactions between the company and its suppliers. In other words, it is the accounts
payable department's job to make sure all outstanding invoices from their suppliers are
approved, processed, and paid.
Equipment is a noncurrent or long-term asset account which reports the cost of the
equipment. Equipment will be depreciated over its useful life by debiting the income
statement account Depreciation Expense and crediting the balance sheet account
Accumulated Depreciation (a contra asset account).
Define a trial balance and what is it used for - CORRECT ANSWERS -A trial balance is
a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and
credit account column totals that are equal. ... The general purpose of producing a trial
balance is to ensure the entries in a company's bookkeeping system are mathematically
correct.
Calculate the ending balance of a t-account - CORRECT ANSWERS -The ending
balance is the net residual balance in an account. It is usually measured at the end of a
reporting period, as part of the closing process. An ending balance is derived by adding
up the transaction totals in an account and then adding this total to the beginning
balance.
Know difference between cash accounting and accrual accounting - CORRECT
ANSWERS -The cash accounting is quicker and simpler making the process faster
however it is not as detailed or accurate the accrual accounting
Know definition of a contra-account - CORRECT ANSWERS -A contra account is an
account used in a general ledger to reduce the value of a related account. They are
useful to preserve the historical value in a main account while presenting a decrease or
write-down in a separate contra account that nets to the current book value.
, Define book value - CORRECT ANSWERS -In accounting, book value is the value of an
asset according to its balance sheet account balance.
Know how, why, and when adjusting entries (deferrals and accruals) and closingentries
are prepared - CORRECT ANSWERS -Accruals: Revenues earned or expenses
incurred that have not been previously recorded
Deferrals: Receipts of assets or payments of cash in advance of revenue or expense
recognition
1.Close all income accounts to Income Summary
2.Close all expense accounts to Income Summary
3.Close Income Summary to the appropriate capital account
4.Close withdrawals to the capital account/s (this step is for sole proprietorship and
partnership only)
Know the name of the rules of accounting and who creates them - CORRECT
ANSWERS -The FASB (Finance Accounting Standards Board) names the rules of
accounting and the GAAP (Generally Accepted Accounting Principles) creates them.
Know the different principles and assumptions introduced in the unit including economic
entity assumption, revenue recognition, expense recognition and cost principles. -
CORRECT ANSWERS -Economic Entity Assumption: An accounting principle that
separates the transactions carried out by the business from its owner.
Revenue Recognition: Revenue recognition is a generally accepted accounting principle
(GAAP) that identifies the specific conditions in which revenue is recognized and
determines how to account for it.
Expense Recognition: Expense recognition is the act of converting an asset into an
expense. This is done when the utility of an asset has been consumed.
Cost Principles: The cost principle is an accounting principle that records assets at their
respective cash amounts at the time the asset was purchased or acquired. ...
Oftentimes, the financial records may track the depreciation or growing value of
acquired assets, however, the cost principle will remain the same.
Understand the differences between corporations, partnerships and sole proprietorships
- CORRECT ANSWERS -Corporation: A company or group of people authorized to act
as a single entity (legally a person) and recognized as such in law.
Partnerhips: A partnership is a formal arrangement by two or more parties to manage
and operate a business and share its profits. ... In particular, in a partnership business,
all partners share liabilities and profits equally, while in others, partners have limited
liability.
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