MFT BUSINESS EXAM set 2 Questions With Complete Solutions Balance Sheet - Correct Answers ✅Attempts to describe the financial condition of the firm at a point in time.
Includes: Assets, Liabilities, & Equity - "net assets" what
remains after deducting liabilities from assets..Income Statement - Correct Answers ✅Presents the results of the operations of an entity over a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
Statement of Equity or Statement of Retained Earnings (Capital) - Correct Answers ✅Bridges the gap between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and
Distribution to owners Statement of Cash Flows - Correct Answers ✅Provides information about a company's cash receipts and cash payments during a specific period of time. 1 / 4
MFT BUSINESS EXAM set 2 Questions With Complete Solutions
Includes all 10 elements of financial statements: assets,
liabilities, equity, net income, income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners.Cash Basis Accounting - Correct Answers ✅Revenue is recognized in the accounting period in which the associated cash is received and Expenses are recognized in the accounting period that the cash is paid.Accrual Basis Accounting - Correct Answers ✅Revenue is recognized in the accounting period in which the revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is made, not when it is paid for.) Depreciation - Correct Answers ✅A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes.Straight-Line Deprecation - Correct Answers ✅Straight Line Depreciation - (estimated value/useful life) Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not disposed of prior to the end of estimated useful life.The value is divided among estimated life of item. 2 / 4
MFT BUSINESS EXAM set 2 Questions With Complete Solutions Double Declining Balance Depreciation - Correct Answers ✅Double Declining Balance An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and less in the later periods.) Basic Inventory Equation for Goods - Correct Answers ✅Beginning Inventory + Purchases = Goods Basic Inventory Equation for Cost of Goods Sold (COGS) - Correct Answers ✅Goods Available for Sale - Ending Inventory = Cost of Goods Sold (COGS) Basic Inventory Equation for Ending Inventory - Correct Answers ✅Beginning Inventory + Purchases = Goods Available for Sale - Cost of Goods Sold (COGS) = ending inventory Periodic Inventory Accounting - Correct Answers ✅No transactions are recorded in the inventory account until the end of the accounting period. Merchandise purchases are recorded in a purchases account.Inventory is counted and costed at the end of each accounting period. The inventory account beginning balance 3 / 4
MFT BUSINESS EXAM set 2 Questions With Complete Solutions is adjusted to physical inventory amount and the difference is added to or subtracted from periodic Cost of Goods Sold.Perpetual Inventory Accounting - Correct Answers ✅Merchandise purchases are added to the inventory account when the merchandise is received.Cost of Goods Sold is computed and subtracted from the inventory account as sales are recorded.FIFO (Inventory) - Correct Answers ✅Inventory Oldest
items inventory are sold first .(Example: Fruit)
LIFO (Inventory) - Correct Answers ✅Most recent items
added to inventory are sold first. (Example: Ore from Mining)
Average Cost (Inventory) - Correct Answers ✅Ending inventory units are costed using an average cost of goods
available divided by the units available for sale. (Example:
Rope) Specific Identification (Inventory) - Correct Answers
✅Inventory items are tagged with their cost. (Example:
automobiles)
- / 4