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Accounting Basics

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What is a natural business year?


What are the elements of financial statements?


Is it possible to have a balance sheet for a single day?


What is GAAP?


When should costs be expensed and when should costs be capitalized?


What is the difference between an invoice and a statement?


What is the meaning of systematic and rational allocation?


What is the difference in salaries between a bookkeeper and an accountant?


What is stock?


What is an account?


What is separation of duties?


What is the difference between stocks and bonds?


How does an expense affect the balance sheet?


Are fixed assets the same as plant assets?


What is the difference between cost and price?


What is a credit?


What is the entry when a contract is signed?


What is interest expense?


What is the difference between a debit and a debit balance?


What are accruals?


How do I record a loan payment which includes paying both interest and principal?


What is historical cost?


What is turnover?


What is the definition of net sales?


Why does a company’s profit appear as a credit on its balance sheet?


Where can I find a sample of a cash flow statement?


Why is the accuracy of inventory valuation so important?


Why would Prepaid Insurance have a credit balance?


What is the accounting entry when an order is received?


What is the difference between net cash flow and net income?


How do you record money from an insurance claim involving property?


Are liabilities always a bad thing?


Why are assets and expenses increased with a debit?


How do I calculate the amount of sales tax that is included in total receipts?


What is a certificate of deposit?


How much of the contribution margin is profit on units sold in excess of the break-even point?


Which accounts are debited in the closing entries?


Where can I learn about the accounting terms used in not-for-profit organizations?


What does debit memo mean on a bank statement?


Is the sales tax paid on merchandise that you will resell an expense?


How do you record the sales tax on the purchase of an asset?


What is the difference between the Cash Flow and Funds Flow statements?


How do you record an asset that was partially financed?


What is the difference between par and no par value stock?


Are payroll withholding taxes an expense or a liability?


Why is the Cash Flow Statement identified as one of the financial statements?


Why is the P&L profit entered on the credit side of the balance sheet?


What is the difference between assets and fixed assets?


What is the difference between stockholder and shareholder?


What is window dressing?


If a customer pays for the same invoice twice, should the customer be informed?


What is the chart of accounts?


If I want a gross margin of 25%, what percent should I mark up my product?


What is the difference between paid in capital and retained earnings?


What does the term organic growth mean?


What is the difference between gross profit margin and gross margin?


What is meant by reconciling an account?


How should the cost of a yearly subscription for a newspaper be recorded?


Why does the fixed cost per unit change?


What is the difference between entries in a general journal versus a general ledger?


What is reported as property, plant and equipment?


In what order are liabilities listed in the chart of accounts?


What is the difference between a trial balance and a balance sheet?


How do I record exterior cement work? Is it an asset or an expense?


What is a classified balance sheet?


What is the journal entry to record a one-year subscription for a magazine?


Is contributed capital a non-current asset or a current asset, and is it a debit or credit?


Why can a retailer record its purchase of merchandise as a debit to purchases within the cost of goods sold, instead of the asset inventory?


How do you record a check that clears the bank months after it was voided?


Will I be able to pass the CPA Exam after studying the accounting material on AccountingCoach.com?


What is the difference between reserve and allowance?


What is the entry when a company lends money to an employee?


Why is a product that sells for $50 reported in inventory at its cost of $40?


Should a retailer’s delivery surcharges be reported as revenues or as other income?


How do you report a write-down in inventory?


How do I determine my payroll tax liabilities?


Under accrual accounting, how are worker comp premiums handled?


Is the sales tax on merchandise purchased for resale included in inventory?


What is the difference between cost and expense?


Why is prepaid insurance a short term asset?


How does the purchase of a new machine affect the profit and loss statement?


Why does an inventory error affect two periods?


If inventory is understated at the end of the year, what is the effect on net income?


How much do you depreciate an asset and when?


Why is the distinction between product costs and period costs important?


Why isn’t the direct write off method of uncollectible accounts receivable the preferred method?


Are earnings different from profits?


Is it acceptable for companies to use two methods of depreciation?


Is a prepaid expense recorded initially as an expense?


What is meant by the term going concern?


What if an employee’s actual vacation payment is greater than the amount that has been accrued?


What is an unpresented cheque or check and does it require an adjustment to the balance sheet?


Are repairs to office equipment an expense?


Where should I enter unpaid wages?


Why is there a difference in the amounts for Bad Debts Expense and Allowance for Doubtful Accounts?


What is the cost of goods sold?


Why is depreciation on the income statement different from the depreciation on the balance sheet?


How many days after a month ends should the bank reconciliation be done?


Is depreciation a source of funds?


What is the meaning of debtor?


Does sales commission get reported in the income statement?


What are the effects of depreciation?


What is a balance sheet and why is it prepared?


Is a utility bill an expense?


What is the difference between reserve and provision?


A credit is not a normal balance for what accounts?


What is the difference between unearned revenue and unrecorded revenue?


Is there a difference between the accounts Purchases and Inventory?


What is a T-account?


What are some reasons that cause the balance on the bank statement to differ from the cash balance on the books?


What is the accounting cycle?


What is recorded in the Wages and Salaries Expense account?


Should an owner’s compensation be recorded as an expense or in the Drawing account?


What is the distinction between debtor and creditor?


How does the accounting equation stay in balance when the monthly rent is paid?


What is Big 4 Accounting?


Will the adjusting entry amounts appear in the balance sheet and income statement?


What is the accounting entry to close the sole proprietorship drawing account?


Should inventories be reported at their cost or at their selling prices?


What are accrued expenses and when are they recorded?


What are accrued revenues and when are they recorded?


How do you estimate the amount of uncollectible accounts receivable?


What is the meaning of equity?


What is the difference between product costs and period costs?


Why is Rent Expense a debit and Service Revenues a credit?


When do you put parentheses ( ) around a number?


What is the deferred revenue?


What is columnar?


If a company earns a profit, which balance sheet items change?


Which accounts get closed at the end of a fiscal year?


What are the accounting principles, assumptions, and concepts?


How does petty cash affect expenses?


Is the cost of goods sold an expense?


What is the difference between revenue, income, and gain?


What is principles of accounting?


What is a nominal account in accounting?


Is the sale of a plant asset recorded in the sales account?


What is the difference between accounts payable and accounts receivable?


What is the abbreviation for debit and credit?


What does it mean to replenish the petty cash fund?


What is the difference between a cost and an expense?


Is advertising an asset or an expense?


What is the accounting equation?


What does crossfoot mean?


What is the difference between a general ledger and a general journal?


Should receipts be recorded using the date the money was received or the date the money was deposited in the bank accounts?


Our income statement shows wide fluctuations in utilities expense from month to month. I suspect our accounting is not proper. Any suggestions?


What is the Purpose of Control Accounts?


How do the responsibilities of a bookkeeper differ from those of an accountant?


What Does Double Entry Mean?


The balance sheet and income statement are connected.


What are adjusting entries?


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