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Accounting Basics
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245 Q&A
What is a general ledger account?

What is the difference between accounts

payable and accounts receivable?

What are accruals?

How do I calculate the amount of sales tax

that is included in total receipts?

What is the distinction between debtor and

creditor?

What is the cost of goods sold?

What is the difference between the cash

basis and the accrual basis of accounting?

What is owner's equity?

What is petty cash?

What are accrued expenses and when are

they recorded?

What is the difference between financial

accounting and management accounting?

What is equity?

What is the difference between a general

ledger and a general journal?

What are prepaid expenses?

What is the cost of sales?

What is principles of accounting?

What is the purpose of control accounts?

What is the difference between product

costs and period costs?

What is included in cash and cash

equivalents?

What is the difference between an implicit

cost and an explicit cost?

What is meant by reconciling an account?

What is the difference between stocks and

bonds?

What is the meaning of debit?

Why is depreciation on the income

statement different from the depreciation on
the balance sheet?

What does debit memo mean on a bank

statement?

What is a contra asset account?

What is the cost principle?

What is the purpose of the cash flow

statement?

What is the difference between a trial

balance and a balance sheet?

What is a nominal account in accounting?

Is there a difference between an expense

and an expenditure?

What is deferred revenue?

When do you put parentheses ( ) around a

number?

If I want a gross margin of 25%, what

percent should I mark up my product?

What are adjusting entries?

What is the statement of financial position?

What is a creditor?

What is GAAP?

What is the accounting cycle?

How are the balance sheet and income

statement connected?

How do I record a loan payment which

includes paying both interest and principal?

What is a balance sheet and why is it

prepared?

What is the difference between gross profit

and net profit?

What is an account?

What are operating expenses?

What are assets?

What is the difference between a cost and

an expense?

What is the difference between revenue,

income, and gain?

What is the meaning of debtor?

What are the accounting principles,

assumptions, and concepts?

How do you report a write-down in

inventory?

What is a noncurrent asset?

What is an expense?

What is the difference between liability and

debt?

What is reported as property, plant and

equipment?

What are balance sheet accounts?

What is budgeting?

What is gross profit?

What is the difference between cost and

expense?

What are some reasons that cause the

balance on the bank statement to differ from
the cash balance on the books?

What is the difference between gross profit

margin and gross margin?

Where are accruals reflected on the balance

sheet?

What is the full disclosure principle?

What is a temporary account?

What is interest expense?

What are income statement accounts?

What is going concern?

Is the cost of goods sold an expense?

What is a capital account?

What is the difference between a debit and a

debit balance?

What is the operating cycle?

What is the accounting equation?

What are revenues?

Where does the purchase of equipment

show up on a profit and loss statement?

What are the effects of depreciation?

Where should I enter unpaid wages?

What is inventory?

What is the difference between assets and

fixed assets?

What is historical cost?

Which accounts get closed at the end of a

fiscal year?

What is the difference between interest

expense and interest payable?

What is window dressing?

What is the income statement?

What are accounting principles?

What is a fiscal year?

What is accrued income?

What is the difference between depreciation

expense and accumulated depreciation?

Why is there a difference in the amounts for

Bad Debts Expense and Allowance for
Doubtful Accounts?

What is a revenue expenditure?

When should costs be expensed and when

should costs be capitalized?

Is a prepaid expense recorded initially as an

expense?

What are the typical items reported as

current liabilities?

What is the difference between an invoice

and a statement?

What is a general ledger?

What is a long-term asset?

What is the difference between net cash

flow and net income?

Are payroll withholding taxes an expense or

a liability?

How does an expense affect the balance

sheet?

What is payroll accounting?

What is net income?

What is recorded in the Wages and Salaries

Expense account?

What is the difference between paid-in

capital and retained earnings?

Is it possible for owner's equity to be a

negative amount?

What are inventoriable costs?

What is carriage outwards?

How do you record the interest that is

unpaid on a note payable?

What is the difference between par and no

par value stock?

Why are assets and expenses increased

with a debit?

What is a financial statement?

What is an unpresented cheque or check

and does it require an adjustment to the
balance sheet?

What are accrued revenues and when are

they recorded?

What does a balance sheet tell us?

What are debits and credits?

What is an accounting period?

What is a classified balance sheet?

What is the difference between revenues

and receipts?

What does it mean to replenish the petty

cash fund?

What is a liability account?

How do you record an asset that was

partially financed?

What is the difference between entries in a

general journal versus a general ledger?

Is advertising an asset or an expense?

Does sales commission get reported in the

income statement?

Why are accruals needed every month?

What is the difference between fixed assets

and noncurrent assets?

What is the difference between income and

profit?

Is there a difference between the accounts

Purchases and Inventory?

If inventory is understated at the end of the

year, what is the effect on net income?

Why isn't the direct write off method of

uncollectible accounts receivable the
preferred method?

What is the accounting entry to close the

sole proprietorship drawing account?

What is the difference between revenues

and earnings?

Which accounts are debited in the closing

entries?

If a company earns a profit, which balance

sheet items change?

What is the accrual method?

What is Big 4 Accounting?

Why is the P&L profit entered on the credit

side of the balance sheet?

What is stock?

Why is Rent Expense a debit and Service

Revenues a credit?

How can a company have a profit but not

have cash?

What is the difference between the Cash

Flow and Funds Flow statements?

What does crossfoot mean?

In what order are liabilities listed in the chart

of accounts?

How do you estimate the amount of

uncollectible accounts receivable?

What is periodicity in accounting?

What is a credit?

What is the journal entry to record a one-

year subscription for a magazine?

What are sales?

Why does the fixed cost per unit change?

What are the required financial statements?

Is depreciation a source of funds?

What are the elements of financial

statements?

What is ERP?

What are the ways to value inventory?

What is the cash flow statement?

What is the statement of activities?

What is the entry when a contract is signed?

What is the difference between unearned

revenue and unrecorded revenue?

What is the advantage of using historical

cost on the balance sheet for property, plant
and equipment?

Why would Prepaid Insurance have a credit

balance?

A credit is not a normal balance for what

accounts?

What is the difference between the accounts

rent receivable and rent revenue?

How does the accounting equation stay in

balance when the monthly rent is paid?

What is the difference between expenses

and payments?

What is the difference between reserve and

provision?

What is separation of duties?

What is the abbreviation for debit and

credit?

How does petty cash affect expenses?

What is the difference between cost and

price?

What is the difference in salaries between a

bookkeeper and an accountant?

Why is prepaid insurance a short term

asset?

Why are sales a credit?

What is the accounting entry when an order

is received?

What is the statement of cash flows?

How much do you depreciate an asset and

when?

What does double entry mean?

What are gross sales?

Should inventories be reported at their cost

or at their selling prices?

Why is the distinction between product costs

and period costs important?

How does the purchase of a new machine

affect the profit and loss statement?

Which financial statement tells the value of a

business?

Why is the accuracy of inventory valuation

so important?

Under accrual accounting, how are worker

comp premiums handled?

What is turnover?

What are accrued liabilities?

What is a sole proprietorship?

What is the difference between stockholder

and shareholder?

What is the entry when a company lends

money to an employee?

Is it acceptable for companies to use two

methods of depreciation?

What is the difference between reserve and

allowance?

Is contributed capital a noncurrent asset or a

current asset, and is it a debit or credit?

At what point are revenues considered to be

earned?

Why does an inventory error affect two

periods?

What is the chart of accounts?

Is the sale of a plant asset recorded in the

sales account?

What are consolidated statements of

operations?

Can a fully depreciated asset be revalued?

What is the definition of net sales?

Why does a company's profit appear as a

credit on its balance sheet?

What is a natural business year?

What is an asset account?

How do the responsibilities of a bookkeeper

differ from those of an accountant?

What is net?

How do I determine my payroll tax liabilities?

How should the cost of a yearly subscription

for a newspaper be recorded?

How are period costs reported in the

financial statements?

What is burn rate?

What is a certificate of deposit?

What is the meaning of systematic and

rational allocation?

How many days after a month ends should

the bank reconciliation be done?

The balance sheet and income statement

are connected.

Where can I find a sample of a cash flow

statement?

What is a lump sum payment?

Are liabilities always a bad thing?

Is the sales tax on merchandise purchased

for resale included in inventory?

What does the term organic growth mean?

Are fixed assets the same as plant assets?

What does the cost principle mean for a

company's income statement?

How do you record the sales tax on the

purchase of an asset?

Are repairs to office equipment an expense?

Should an owner's compensation be

recorded as an expense or in the Drawing
account?

Are earnings different from profits?

What if an employee's actual vacation

payment is greater than the amount that has
been accrued?

Does the accrual method apply to the

purchase of equipment?

Is it a requirement for a small business to

have a CPA?

Is a utility bill an expense?

Should receipts be recorded using the date

the money was received or the date the
money was deposited in the bank accounts?

Is it possible to have a balance sheet for a

single day?

How do you record a check that clears the

bank months after it was voided?

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 I record exterior cement work? Is it

an asset or an expense?

Is the sales tax paid on merchandise that

you will resell an expense?