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CPCM 5.5 Accounting Exam | Questions And Answers Latest {} A+ Graded | 100% Verified
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CPCM 5.5 Accounting Exam | Questions And Answers Latest {2024- 2025} A+ Graded |100% Verified
Accounting equation - Assets = liabilities + owner's equity. The accounting equation is the basis for the
financial statement called the balance sheet.
Accounts payable (A/P) - Bills a business owes to its suppliers.
Accounts receivable (A/R) - Amounts owed to a business by its customers
Accrual method of accounting - With the accrual method, a business records income when the sale
occurs, not necessarily when the business receives payment. The business records an expense when it
received goods or services, even thought it may not pay for them until later.
Adjusting entries - Special accounting entries that must be made when you close the books at the end of
an accounting period. Adjusting entries are necessary to update your accounts for items that are not
recorded in your daily transactions.
Aging Report - An aging report is a list of customers' accounts receivable amounts and their due dates. It
alerts you to any slow-paying customers. You can also prepare an aging report for your accounts
payable, which will help you manage your outstanding bills.
Allowance for bad debts - Also called reserve for bad debts, it is an estimate of uncollectable customer
accounts. It is known as a contra account because it is listed with the assets, but it will have a credit
balance instead of a debit balance. For balance sheet purposes, it is a reduction of accounts receivable.
Assets - Things of value held by the business. Assets are balance sheet accounts. Examples of assets
include cash, accounts receivable, and furniture and fixtures.
Balance sheet - Also called a statement of financial position, it is a financial snapshot of your business at
a given date in time. It lists your assets, your liabilities, and the difference between the two, which is
your equity, or net worth.
, Budgeting - The process of generating a quantitative plan of operations that identifies the resources
needed to accomplish the organization's goals and objectives. It can include both financial and non-
financial reports.
Capital - Money invested in the business by the owners; also called equity.
Cash method of accounting - If a business uses the cash method, it records income only when it receives
cash from its customers. The business records an expense only when it writes the check to the vendor.
Chart of accounts - The list of account titles you use to keep your accounting records.
Closing - "Closing the books" refers to procedures that take place at the end of an accounting period.
Adjusting entries are made, and then the income and expense accounts are "closed." The net profit that
results from the closing of the income and expense accounts is transferred to an equity account such as
retained earnings.
Corporation - A legal entity that a state forms by issuing a charter. A corporation is owned by one or
more stockholders.
Cost of goods sold - Cost of inventory items sold to your customers. It may consist of several cost
components, such as merchandise purchase costs, freight, and manufacturing costs.
Credit memo - Writing off all of part of a customer's account balance. A credit memo would be required,
for example, when a customer who bought merchandise on account returned some merchandise, or
overpaid on their account.
Credits - At least one component of every accounting transaction (journal entry) is a credit. Credits
increase liabilities and equity and decrease assets.
Current liabilities - Liabilities payable within one year. Examples are accounts payable and payroll taxes
payable.
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