Questions and Answers on Accounting

Topics: Accounts receivable, Generally Accepted Accounting Principles, Balance sheet Pages: 3 (1239 words) Published: November 16, 2014


1.1 1001 Cash:
The cash account is a balance sheet account and is in the liquid funds accounts It is important for the system be able to discriminate between balance sheet accounts (real accounts) and income statement accounts (nominal accounts). This classification is important for closing purposes and also for developing the financial statements. The account classification (liquid funds) is also important for the system when developing the financial statements.

1.2 2001 Accounts Payable:
Again, this is a balance sheet account. See below for more information concerning this account.

1.3 Before going to the next account, let’s analyze the Accounts Payable account closer. This account is special. Look at the Control data tab and note what the Reconciliation account is. What is this all about? This is how the accounts payable subsidiary ledger is set up. Since it is accounts payable, the subsidiary ledger will contain entries for each vendor for which we do business. In SAP terminology this is termed a reconciliation account, since the subsidiary ledger must reconcile with the general ledger control account.

1.4 5001 Cost of Goods Sold:
This is an income statement account (P & L). Hence, it is a nominal account that must be closed at the end of the fiscal period.

1.5 1115 Goods Rcvd/ Invoice Rcvd:
This is an account you as a student have probably never encountered before. It is a suspense account, which is explained in more detail in the answer to the next question.

1.6 Now let’s analyze the Goods Rcvd/ Invoice Rcvd account closer. This account is necessary because of timing differences in the real world. This is what is termed a suspense account. Briefly explain how entries would be made to this account (i.e. What transactions happen and how are they recorded?) and why all transactions in the account should eventually be zeroed out. (If you don’t grasp this concept yet, you may wait to answer this part until you do...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Accounting Information Systems: Multiple Choice Questions with Answers Essay
  • Essay on Questions and Answers on Accounts
  • Questions and Answers on Finance Essay
  • Essay on Accounting: Questions and Answers
  • Questions and Answers on Managerial Accounting Essay
  • Accounting Questions and Answers Essay
  • Essay about Questions and Answers on Accounting Theory
  • Question and Answer for Advanced Accounting Essay

Become a StudyMode Member

Sign Up - It's Free