BFAR Reviewer

• Accrued expenses


  An expense already paid but not yet incurred
• Accrual


  The adjustment deals with an amount unrecorded in any amount
• Accounting


  The process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information
• Operating Activities


  The use of resources to design, produce, distribute, and market goods and services
• Accrual basis


  Accounting Principle which states that revenue is to be recognized in the accounting period when goods are delivered or services are rendered or performed
• Accounting equation


  The most basic tool of accounting
• Cash


  Any medium of exchange that a bank will accept for deposit at a face value
• Report format


  It simply list the assets, followed by the liabilities then by the owner's equity in vertical sequence
• Financial flexibility


  Ability to take effective actions to alter the amounts and timings to cash flows so that it can respond to unexpected needs and opportunities
• Consistency


  Accounting changes are often made, and the monetary impact is reflected in the financial statement of a company even through in theory this may be a violation of the accounting concept of
• Periodicity


  Accountants produce financial statements at arbitrary points in time of accordance with which basic principle
• Materiality


  Principle which requires relevant information to form part of financial statements for decision-making purposes
• Capital


  Capital = Assets - Liabilities + Withdrawal + Expenses - Revenue
• If a transaction causes total liabilities to decrease but does not affect the owners equity

  Assets will be decreased
• Financial statement order


  The sequence of the arrangement of the accounts in the ledger - that is, assets first, followed by liabilities, owner's equity accounts, revenues and expenses
• Real accounts


  Balance sheet accounts that are not eliminated in the closing entries
• Adjusting entries


  Entries prepared, as a step in the accounting process, to bring the books and up-to-date
• Reversing entries do not apply to depreciation
• Profit


  The difference between the amounts received from customers for goods or services and the amounts paid for the inputs used to provide for the goods or services
• Cash budget is not a general purpose financial statement
• Business entity concept


  The entity is an individual economic unit for which data are recorded, analyzed, and reported
• Prepaid expenses


  Goods purchased on account for future use in the business, such as supplies
• Owners capital


  In accounts where decreases are recorded by credits
• Unearned revenue


  The account type and normal balance is Liability, credit
• Accrual accounting


  Revenue is recorded and reported when the services are rendered without regard to when the cash is received
• Adjusting entries


  Always include at least one income statement account and one balance sheet account
• Purchase of land has no effect on owners equity
• Accounts receivable


  The asset created by a business when it makes a sale on account
• Accounting is not an exact science rather than art
• Accounting


  The overall objective is to provide quantitative financial information about an entity that is useful in making economic decisions
• Investors


  The users who require information on risk and return on investment
• Utilities Expense


  The entry that records the receipt of the utility bill from the water company
• General Ledger


  The process of posting is mostly associated with
• Post closing trial balance

  Prepared before reversing the entries
• Treasury stock


  Classified as a contra-stockholder's equity accounts
• Liquidation of partnership


  Assets are sold, liabilities are paid, and remaining cash is distributed to the partners
• Updating of the partnership books


  Required if a partner withdraws from the partnership before the end of the accounting period
• Types of partners


  • Capitalist partner
  • Capitalist-secret partner
  • Industrial managing partner
• Bonus


  This allowance for profit distribution is granted only if there is profit
• If the amount invested by the upcoming partner is equal to the interest he acquires then there is no bonus nor asset revaluation