Bookkeeping Basics

Steps of the Accounting Cycle? steps 1-6?

1.Collect and Analyze Transactions. 2.Record/post transactions to the ledger 3. prepare an unadjusted trial balance 4.prepare adjusting entries at the end of the period 5.prepare an adjusted trial balance 6.prepare financial statements.

What tasks would a bookkeeper do? Handle bank feeds and reconciles bank accounts, managing accounts receivable/payable, and record financial transactions Manage accounts receivable/payable, recording financial transactions, and implement HR policies Record financial transactions, create employee write-ups, and handle bank feeds and reconcile bank accounts

Correct! Bookkeepers handle bank feeds and reconciles bank accounts, in addition to other tasks like recording financial transactions and managing accounts receivable/payable.

Which of the following is not a typical task bookkeepers perform for their clients? Complete tax requirements. Reconcile bank accounts. Prepare financial statements. Handle all accounts payable and receivable.

Correct! Completing taxes is not a task you'd be completing by yourself. You may be asked to help an accountant with completing taxes, but this is not a task you would be authorized to complete yourself.

Confidentiality

Never discussing anything relating to a client outside of the job Never using inside information about a client for personal gain

Objectivity

Never take a job that might pose a conflict of interest Never allowing another party to influence your findings Never let personal bias get in the way of performing your duties

Monetary Unit Assumption

One currency is used throughout all accounting activities. In the united states us dollars is used... inflation is not a consideration when recording finances.

Question 17 A business owner had a piece of equipment serviced and paid for the repair with a check. The owner would then enter the transaction into their accounting software as which of the following A Bank Feed An invoice A bank deposit A Vendor Check

To show that a payment was made to a vendor using a check, the owner would use the Vendor Check transaction.

investments in other companies is equity or assets?

assets

Statement of Equity

changes in an owners total equity during the reporting period. this statement shows the owners capital at the beginning of the reporting period the changes that have affected that capital and the resulting capital at the end of the reporting period.

liability, equity and revenue are all debit or credit accounts?

credit accounts

What the company owes to others is defined as:

equity

What is the Income Statement?

Also called the profit and loss statement it shows a companies shows a companies expenses and revenues during a particular period

What are Accruals?

Basically the opposite of deferrals they concern future payments or expenses. for example you performed a job and sent a customer a bill but they haven't paid you yet or you paid rent on office space up front for six months.

Professionalism

Being courteous and considerate of the business owner's needs Avoiding any activity, personal or professional, that could bring shame to the profession or business Maintaining proper credentials and keeping up skills through continuing education

A way of bookkeeping that tracks which accounts increase and which decrease for a given transaction is known as:

Double-entry

Question 6 Which of the following statements would best describe the Matching Principle? Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate. The manufacturing cost, or cost of goods sold, is recognized once the manufacturing process is complete. Expenses should be recognized when they are paid, regardless of when revenue is generated.

Expenses like manufacturing costs or depreciation should be recognized in the same period as the revenue it helped generate.

Going concern assumption

Going concern refers to a business that is stable enough to operate and meet its obligations for the foreseeable future. when a company is not longer a going concern it must report the issues its having including ongoing losses, credit denial and lawsuits.

what is the balance sheet?

It shows a companies assets liabilities and equity during a particular period

What are Deferrals

Remove transactions that belong to a different time period. for example you bought a new lawnmower but haven't used it yet or someone paid you up front but you haven't performed the service yet.

four key bookkeeping elements Honesty

Reporting financial data in an accurate and timely manner Owning any mistakes and doing everything you can to fix them Being open and transparent with your client about the state of their finances.

Consistency Principle

States that when a business adopts a specific accounting method it will enter all similar items in teh exact same way in the future. the princinple apples to line items on all financial statements and reports.

Which report is used to calculate net income?

The Income Statement calculates net income by subtracting total expense from total revenue.

Economic Entity Assumption

The business is a separate entity, so the activities of a business must be kept separate from any other financial activities of its business owners. ex mixing personal and business receipts is not okay.

Materiality Principle

The materiality principle states that an accounting standard can be ignored if the impact has such small effect onfinancial statements that it would not be misleading.

what are accounting adjustmenets?

a business transaction that has not yet been included in the accounting records of a business as of a specific date.

matching principle

it means when a business earned revenue, money during the reporting period, all expenses spent during the same reporting period should be matched up and factored into the same financial statement.

income statement contains?

revenue, cost of goods sold, operating expenses, operating profit(loss), profit (loss_ before taxes

revenue recognition principle

the principle means that a business only recognizes money once the good or service has been provided to the customer. In other words, if you haven't done the job, you haven't earned the money.

what is the statement of equity

the statement of equity reports the changes in company equity from the opening balance to the end of period balance

The reliability assumption

this assumption makes it mandatory for companies to record only accounting transactions that can be verified through invoices, billing statements, receipts, and bank statements.

Conservatism assumption

when bookkeepers or accountants are uncertain and need to determine how to report an item conservatism guides them to choose the option that shows less income or asset benefit. potential losses can be recorded while potential gains cannot. carlos employee is threatening a civil lawsuit the lawsuit can be considered a loss and can be noted. the potential gains due to a new business opening down a street cannot be noted based on the conservatism assumption.

where is chart of accounts found in quickbooks online?

accounting then chart of accounts

full disclosure principle

all information that is relative to the business and is important to a lender or investor has to be disclosed in financial statements or in the notes of the statements. one of carlos cooks is filing a workers compensation due to medical bills incurred from a fall, carlos must disclose the litigation in notes of his financial statements because of the full disclosure principle.

What is cash basis accounting?

an accounting method in which revenue is recognized when payment is received and expenses are recognized when paid out.

what is accrual method of accounting?

an accounting method in which revenues are reported when they are earned and expenses are reported when they are incurred.

What the company owns or controls and expects to gain value from is defined as:

asset

Short-term Investments would be an example of what kind of account?

asset account