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Questions and Answers
What are the two fundamental accounting assumptions?
What are the two fundamental accounting assumptions?
The two fundamental accounting assumptions are the accrual basis assumption and the going concern assumption.
What are the three types of accounts?
What are the three types of accounts?
The three types of accounts are personal accounts, real accounts, and nominal accounts.
What is the purpose of a trial balance?
What is the purpose of a trial balance?
The purpose of a trial balance is to ensure that the total debits equal the total credits in the accounting records.
What are the General Accepted Accounting Principles (GAAP)?
What are the General Accepted Accounting Principles (GAAP)?
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What are contingent assets and contingent liabilities?
What are contingent assets and contingent liabilities?
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Study Notes
Accounting Fundamentals
- There are two fundamental accounting assumptions: Accrual Assumption (revenue and expenses are recognized when earned or incurred, regardless of cash flow) and Going Concern Assumption (the business will continue to operate for the foreseeable future).
Types of Accounts
- There are three types of accounts: Assets (resources owned or controlled by the business, e.g. cash, inventory, property), Liabilities (debts or obligations owed by the business, e.g. loans, accounts payable), and Equity (owner's stake in the business, e.g. capital, retained earnings).
Trial Balance
- The purpose of a trial balance is to list all general ledger accounts and their corresponding debit or credit balances to ensure that debits equal credits, verifying the accuracy of financial records and identifying any errors.
General Accepted Accounting Principles (GAAP)
- GAAP are a set of rules and guidelines that ensure consistency and transparency in financial reporting, enabling stakeholders to make informed decisions.
- GAAP provide a framework for accounting practices, including asset valuation, revenue recognition, and disclosure requirements.
Contingent Assets and Liabilities
- Contingent Assets are potential assets that may arise from past events, but their existence is uncertain (e.g. potential lawsuit settlements).
- Contingent Liabilities are potential liabilities that may arise from past events, but their existence is uncertain (e.g. potential lawsuits).
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Description
Quiz: Basics of Accounting & Elements of Book-Keeping Test your knowledge on the fundamentals of accounting and book-keeping with this quiz. Designed for students studying Financial Accounting, this quiz will assess your understanding of key concepts and principles. From understanding the basics of accounting to mastering the elements of book-keeping, this quiz will help you gauge your proficiency in these core topics. Take the quiz and enhance your knowledge in these critical areas of commerce.
