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Questions and Answers
What is represented by the residual interest in a business?
What is represented by the residual interest in a business?
What is the main source of revenue for a business that sells goods?
What is the main source of revenue for a business that sells goods?
What type of expense is incurred by a business for its permanent and full-time employees?
What type of expense is incurred by a business for its permanent and full-time employees?
What is the purpose of the Taxes and Licenses expense in a business?
What is the purpose of the Taxes and Licenses expense in a business?
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What type of revenue is generated from bank deposits?
What type of revenue is generated from bank deposits?
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What is the primary characteristic of assets that distinguishes them from other types of accounts?
What is the primary characteristic of assets that distinguishes them from other types of accounts?
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Which of the following assets would be classified as non-current?
Which of the following assets would be classified as non-current?
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What is the primary difference between current and non-current liabilities?
What is the primary difference between current and non-current liabilities?
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Which of the following statements about intangible assets is true?
Which of the following statements about intangible assets is true?
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What is the purpose of classifying assets as current and non-current?
What is the purpose of classifying assets as current and non-current?
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Study Notes
Owner's Equity
- Represents the net difference between total assets and total liabilities
- Represents ownership, terminology changes depending on the form of business organization
Revenues
- Earnings arising from the mainline of business operation
- Result from rendering services or selling goods
- Types of revenues:
- Service Revenue: earnings from rendering services
- Interest Income: interest credited by the bank to the business account
- Sales: earnings from selling goods or merchandise
- Professional Fees: earnings made by professionals from rendering services
Expenses
- Costs incurred by the business in generating revenues
- Types of expenses:
- Utilities Expense: costs associated with electricity, water, and communication
- Salaries Expense: costs incurred for services rendered by permanent and full-time employees
- Wages Expense: costs incurred for services rendered by contractual and temporary employees
- Taxes and Licenses Expense: costs incurred to register the business, acquire operating rights, and settle taxes
Assets
- Resources controlled by the business due to past transactions and events
- Expected to generate future economic benefits
- Can be classified into:
- Current Assets: expected to be realized in cash within one year or the normal operating cycle
- Non-current Assets: cannot be classified as current
- Tangible Assets: physical assets such as cash, supplies, and furniture
- Intangible Assets: non-physical assets such as patents and trademarks
Liabilities
- Present obligations of the business arising from past transactions or events
- Expected to result in an outflow of business resources
- Can be classified into:
- Current Liabilities: expected to be settled within one year or the normal operating cycle
- Non-current Liabilities: expected to be paid in cash beyond one year
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Description
Learn about the different types of assets in accounting, including current and non-current assets. Understand how assets are classified and measured, and their role in business transactions. Test your knowledge of accounting principles with this quiz!
