Accounting Documentation and Contra Accounts Quiz

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18 Questions

What is a limited partnership (LP)?

A business entity with partners having unlimited personal liability

What is the role of a managing partner in a business?

Guiding strategic direction and managing day-to-day activities

What is the distinguishing feature of a memorandum entry in accounting?

A short message without debit and credit amounts

How is accrued expense recognized in accounting?

Credited to an accrued liabilities account

When is accrued income recorded in accounting?

When it is earned, following the accrual accounting method

Which of the following accounts represent tangible assets?

"Real accounts"

What is the main purpose of documentation in accounting?

To provide a financial record of events or activities

Which type of account carries a balance that offsets the normal account?

Contra Account

What is the function of an adjunct account in financial reporting?

Increases the book value of a liability account

Which type of business activity results in a direct effect on the financial status and financial statements?

Cash sales to customers

What does a capitalist partner contribute to the company?

Money or property to the capital

What distinguishes a de jure corporation from other types of partnership?

It has obtained a certificate of incorporation from the state

What is the purpose of a special journal?

To record transactions of a specific type, such as sales or purchases

What does a partnership capital account contain?

All transactions between partners and the partnership firm

How is beginning partner's capital balance calculated?

Through the value of the partner's contribution to the partnership

What does income summary account do?

Aggregates all income accounts except for dividend expenses

What is interest on partners' capital balance?

A distribution of profits to partners

How does the statement of changes in partners' capital differ from the statement of owner's equity?

It includes a column for each partner and a total column for the company

Test your knowledge on documentation in accounting, including financial records of events, expenses, revenues, and inventories. Learn about Contra Accounts which carry balances that offset normal accounts. Explore adjunct accounts that increase the book value of liabilities in financial reporting.

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