What is the purpose of a balance sheet in accounting?
To show a company's financial position at a specific point in time
What are the three main financial statements used in accounting?
Balance sheet, income statement, and cash flow statement
What is the difference between accounts payable and accounts receivable?
Accounts payable is money a company owes to its suppliers and vendors, while accounts receivable is money a company is owed by its customers
What is the purpose of the trial balance in accounting?
To ensure that all debits and credits in the accounting system are equal
What is the accrual basis of accounting?
Recognizing revenue and expenses when they are earned or incurred, regardless of when payment is actually received or made
What is the difference between a debit and a credit in accounting?
A debit represents an increase in assets or a decrease in liabilities and equity, while a credit represents a decrease in assets or an increase in liabilities and equity
What is the purpose of the statement of cash flows in accounting?
To show how a company's cash balance changed over a specific period of time
What is double-entry accounting?
A system of accounting in which every transaction is recorded in two or more accounts, with debits and credits balancing each other out
What is the difference between a current asset and a fixed asset?
Current assets are expected to be used up or converted to cash within one year, while fixed assets are used for the long-term operation of a business
What is the difference between a direct cost and an indirect cost?
A direct cost can be easily traced to a specific product or service, while an indirect cost cannot
What is the purpose of the general ledger in accounting?
To keep track of all the financial transactions of a company in one place
What is the difference between a liability and an equity?
A liability represents a company's obligation to pay back a debt or fulfill a promise, while equity represents the value of a company's assets minus its liabilities
What is the purpose of the income statement in accounting?
To show a company's revenue and expenses over a specific period of time
What is the difference between a journal entry and a ledger entry in accounting?
A journal entry is the first step in recording a financial transaction, while a ledger entry is a summary of all the journal entries for a particular account
What is the purpose of the cost of goods sold account in accounting?
To show the cost of the products or services sold by a company during a specific period of time
What is the purpose of a balance sheet in accounting?
To show a company's financial position at a specific point in time
What are the three main financial statements used in accounting?
Balance sheet, income statement, and cash flow statement
What is the difference between accounts payable and accounts receivable?
Accounts payable is money a company owes to its suppliers and vendors, while accounts receivable is money a company is owed by its customers
What is the purpose of the trial balance in accounting?
To ensure that all debits and credits in the accounting system are equal
What is the accrual basis of accounting?
Recognizing revenue and expenses when they are earned or incurred, regardless of when payment is actually received or made
What is the difference between a debit and a credit in accounting?
A debit represents an increase in assets or a decrease in liabilities and equity, while a credit represents a decrease in assets or an increase in liabilities and equity
What is the purpose of the statement of cash flows in accounting?
To show how a company's cash balance changed over a specific period of time
What is double-entry accounting?
A system of accounting in which every transaction is recorded in two or more accounts, with debits and credits balancing each other out
What is the difference between a current asset and a fixed asset?
Current assets are expected to be used up or converted to cash within one year, while fixed assets are used for the long-term operation of a business
What is the difference between a direct cost and an indirect cost?
A direct cost can be easily traced to a specific product or service, while an indirect cost cannot
What is the purpose of the general ledger in accounting?
To keep track of all the financial transactions of a company in one place
What is the difference between a liability and an equity?
A liability represents a company's obligation to pay back a debt or fulfill a promise, while equity represents the value of a company's assets minus its liabilities
What is the purpose of the income statement in accounting?
To show a company's revenue and expenses over a specific period of time
What is the difference between a journal entry and a ledger entry in accounting?
A journal entry is the first step in recording a financial transaction, while a ledger entry is a summary of all the journal entries for a particular account
What is the purpose of the cost of goods sold account in accounting?
To show the cost of the products or services sold by a company during a specific period of time