ACCOUNT BALANCES For many purposes‚ it is necessary to determine the balance in an account. This is accomplished by adding the debits‚ credits‚ and determining the difference between the two sums. An account is said to have a debit balance if the sum of the debit entries to that account exceeds the sum of the credit entries. Conversely‚ an account has a credit balance if the sum of the credit entries exceeds the sum of the debit entries. Asset accounts normally have debit balances inasmuch as
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There are four different special journals which includes sales journal‚ cash receipts journal‚ purchases journal‚ and cash payments journal which have advantages. The sales journal saves time with the one line entry for each sale and reduces errors. You would use this when you do a credit sale. The cash receipts journal provides daily and weekly information about cash balances. You would use this when you sell merchandise for cash. The purchases journal records a single type of frequently recurring
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financial statements are for a period of time except the a. income statement. b. balance sheet c. owner’s equity statement. d. statement of cash flows 3. A trial balance will not balance if a. a journal entry is posted twice. b. a wrong amount is used in journalizing. c. incorrect account titles are used in journalizing. d. a journal entry is only partially posted. 4. In a service-type business‚ revenue is considered earned a. at the end of the month. b. at the end of the year. c. when
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EXERCISE 1. Nguyen Bich Fitness Club has provided the following information that relates to their financial year ended June 30‚ 2011 Account | Amount ($) | Nguyen Bich - Capital | 350‚000 | Bank Loan – due in October‚ 2012 | 5‚000 | Accounts Payable | 17‚250 | Accounts Receivable | 41‚560 | Cash | 18‚750 | Retained Profits | 76‚000 | Salaries payable | 6‚750 | Supplies | 1‚040 | Salaries Expense | 19‚100 | Buildings | 85‚000 | Prepaid Rent | 15‚600 | Motor Vehicles
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percentage analysis of increases and decreases in individual items in comparative financial statements is called a. vertical analysis b. solvency analysis c. profitability analysis d. horizontal analysis 2. Which of the following below generally is the most useful in analyzing companies of different sizes a. comparative statements b. common-sized financial statements c. price-level accounting d. audit report 3. The percent of fixed
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A balance sheet‚ like a photo‚ provides a financial picture of a company on a given day and time. It categorizes all of a company’s resources as assets‚ all of its debts as liabilities‚ and all of the owner’s investments as equity. A company uses its assets‚ such as accounts receivable‚ inventory‚ and equipment‚ for manufacturing or purchasing products for sale or to provide a service. A company’s assets are financed by its liabilities (debt) and the owner’s equity (net worth). On a balance sheet
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Special Journals and Subsidiary Ledgers The four different types of special journals are sales journal‚ cash receipts journal‚ purchase journal‚ and cash payments journal. Special journals reduce the time needed to complete the posting process and they permit greater division of labor‚ this allows several people to record entries in different journals at the same time. When a transaction cannot be recorded in a special journal it is recorded in a general journal. A sales journal would
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COURSE 2 - The Balance Sheet The balance sheet (also called statement of financial position) reports the financial position of the business at a point in time. It does so by listing the categories and amounts of assets‚ liabilities and equity on a specific date‚ in a format that proves the fundamental accounting equation. ASSETS = EQUITY + LIABILITIES or ASSETS – LIABILITIES = EQUITY Formats of presentation Regardless of
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A balance sheet is a financial statement that reports the assets‚ which are resources owned by a business‚ liabilities‚ and stockholders’ equity at a specific date. Examples of assets would be computers‚ delivery trucks‚ furniture‚ and buildings. A balance sheet has two categories: Assets‚ liabilities‚ and stockholders’ equity. Liabilities are the debts and obligations of a business. Liabilities represent c claims of creditors on the assets of business. Examples of liabilities would be notes
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What is a Balance Sheet? How does a Funds Flow Statement differ from a Balance Sheet? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement. Question 2(a) Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations. If any Question 2(b) Why do you understand by the term ’pay-out ratio’? What factors are taken into consideration while determining pay-out ratio? Should a company follow a
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