Intuit Certified Bookkeeping - Domain 2, Lesson 2

<p>Increases assets and increases owner's equity (C)</p> Signup and view all the answers

<p>$2,400 (D)</p> Signup and view all the answers

<p>Merchandise is for sale, while property and equipment are used in operations (C)</p> Signup and view all the answers

<p>To maintain clarity in asset management (A)</p> Signup and view all the answers

<p>$400 (C)</p> Signup and view all the answers

<p>It is transferred to the cost of goods sold. (A), It is decreased with a credit. (B)</p> Signup and view all the answers

<p>Revenues (B), Assets (C)</p> Signup and view all the answers

<p>It has a natural debit balance. (C)</p> Signup and view all the answers

<p>LIFO (C)</p> Signup and view all the answers

<p>Removal of the cost from the inventory account. (C)</p> Signup and view all the answers

<p>Accounts are primarily increased by debits. (C)</p> Signup and view all the answers

<p>To match current costs with current revenues better. (D)</p> Signup and view all the answers

<p>Inventory sales typically involve physical goods; property sales may not. (D)</p> Signup and view all the answers

<p>Increase depreciation expenses and decrease the associated asset account (C)</p> Signup and view all the answers

<p>Raises both assets and liabilities while owner’s equity stays the same (B)</p> Signup and view all the answers

<p>The amount of time an asset is expected to be useful (D)</p> Signup and view all the answers

<p>It does not affect the accounting equation on a cash purchase (B)</p> Signup and view all the answers

<p>Property, plants, and equipment (A)</p> Signup and view all the answers

<p>Sales transactions affect assets and owner’s equity but not liabilities (D)</p> Signup and view all the answers

<p>Modified Accelerated Cost Recovery System (MACRS) (B)</p> Signup and view all the answers

<p>It is generated by allowing usage of that property or resource (A)</p> Signup and view all the answers

<p>Passive income (A)</p> Signup and view all the answers

<p>Money paid by companies on borrowed funds (C)</p> Signup and view all the answers

<p>Property and equipment are for use, while merchandise is for sale (D)</p> Signup and view all the answers

<p>It directly impacts the revenue section (A)</p> Signup and view all the answers

<p>Cost of Fritters Sold (A)</p> Signup and view all the answers

<p>It decreases owner's equity. (D)</p> Signup and view all the answers

<p>Modified Accelerated Cost Recovery System (MACRS) (C)</p> Signup and view all the answers

<p>Both assets and liabilities increase. (B)</p> Signup and view all the answers

<p>The duration an asset is expected to be useful. (B)</p> Signup and view all the answers

<p>An equal amount is depreciated over its useful life. (D)</p> Signup and view all the answers

<p>Expenses lower net profit. (A)</p> Signup and view all the answers

<p>It comes from licensing intellectual property usage. (A)</p> Signup and view all the answers

<p>It does not affect the balance of the accounting equation. (D)</p> Signup and view all the answers

<p>To control cost categories effectively (B)</p> Signup and view all the answers

<p>Because assets serve different purposes within the company (B)</p> Signup and view all the answers

<p>Debit cash and credit revenue (A)</p> Signup and view all the answers

<p>It is debited from cost of goods sold and credited from merchandise inventory (B)</p> Signup and view all the answers

<p>Debit balance (A)</p> Signup and view all the answers

<p>It increases (A)</p> Signup and view all the answers

<p>Determine the cash sales amount (A)</p> Signup and view all the answers

<p>Sales on account involve future payment (C)</p> Signup and view all the answers

<p>Money earned from interest and royalties without active selling (C)</p> Signup and view all the answers

<p>A fee paid for the use of intellectual property (D)</p> Signup and view all the answers

<p>They account for money paid as interest on borrowed funds (B)</p> Signup and view all the answers

<p>As fixed assets used in business operations (A)</p> Signup and view all the answers

<p>Merchandise is intended for sale, while property and equipment are used (D)</p> Signup and view all the answers

<p>It enables owners to control cost categories. (B)</p> Signup and view all the answers

<p>Cash account and revenue account. (A)</p> Signup and view all the answers

<p>It indicates that inventory is an asset. (C)</p> Signup and view all the answers

<p>A credit to merchandise inventory and a debit to cost of goods sold. (D)</p> Signup and view all the answers

<p>It increases total assets. (A)</p> Signup and view all the answers

<p>The revenue account balance is increased, indicating income. (A)</p> Signup and view all the answers

<p>A debit to cost of goods sold and a credit to merchandise inventory. (A)</p> Signup and view all the answers

<p>Modified Accelerated Cost Recovery System (MACRS) (D)</p> Signup and view all the answers

<p>It reduces owner's equity. (A)</p> Signup and view all the answers

<p>Credit purchases increase both assets and liabilities. (B)</p> Signup and view all the answers

<p>The time an asset will be beneficial to a company. (A)</p> Signup and view all the answers

<p>Income earned from allowing others to use intellectual property. (D)</p> Signup and view all the answers

<p>Its recorded value decreases on the balance sheet. (B)</p> Signup and view all the answers

<p>Constant reduction in asset value. (B)</p> Signup and view all the answers

<p>Assets equal liabilities plus owner's equity. (C)</p> Signup and view all the answers

Exchange of goods for money in a business's daily operations

Methods (FIFO, LIFO, WAC) used to calculate the cost of goods sold.

An asset account representing goods available for sale.

Expense representing the cost of items sold during a period.

An account increases with a debit entry.

A decrease in asset or increase in liability/equity accounts.

First-In, First-Out inventory valuation method.

Stock of items a company starts with.

The decrease in an asset's value over time due to use and age.

The period of time an asset is useful to a company.

The accounting entry to record the decrease in an asset's value each period.

A fundamental concept that states assets always equal the sum of liabilities and owner's equity.

Assets representing goods a company sells.

Buying goods on credit, increasing both liabilities and merchandise inventory.

Property, Plant, and Equipment - long-term assets.

Modified Accelerated Cost Recovery System, one IRS-accepted depreciation method.

Direct sales of goods or services for immediate payment in cash.

Sales on credit, where payment is expected at a later date.

Goods held for resale in a business

Earnings from sales of goods or services

Assets used in a business's operations, not for resale

Long-term assets a business uses in its operations (e.g., equipment, property)

A depreciation method that evenly spreads the cost of an asset over its useful life.

Income earned by allowing someone to use intellectual property or resources.

The cost a company incurs when borrowing money, paid to lenders for the use of their funds.

Earning generated from holding money in a bank or receiving payment from customers who owe you

Money earned without actively selling products or services, such as from investments or royalties

Property and equipment are assets used in a business's operations (like a building or machinery) and are not intended for resale. Merchandise inventory refers to goods a business holds for sale to customers.

Grouping expenses by category allows owners to control costs more effectively. This gives them a clear picture of where their money is going, enabling them to make better financial decisions and potentially reduce unnecessary spending.

Assets are deployed for various purposes within a company. A building may be used for operations, while equipment may be used for administration. Therefore, depreciation expense is allocated according to the asset's use rather than being evenly distributed across departments.

Sales transactions can either be cash sales, where payment is received immediately in cash, or sales on account, where payment is due at a later date and recorded as accounts receivable.

When a sale occurs on account, two accounts are affected: Accounts Receivable (an asset) and Sales Revenue (a revenue account). Accounts Receivable increases because the customer owes the business money, while Sales Revenue reflects the earnings from the sale.

Both cash and accounts receivable have a natural debit balance. This means they increase with a debit entry and decrease with a credit entry.

A sale increases the cash account if payment is received immediately. If the sale is on account, the accounts receivable account increases, meaning the customer now owes the business money.

Revenue accounts have a natural credit balance. This means they increase with a credit entry and decrease with a debit entry.

Merchandise inventory represents goods held available for sale. Since inventory is an asset, it has a natural debit balance, increasing with a debit entry and decreasing with a credit entry.

Recording a sale of inventory removes the sold items from the company's inventory and records the cost of those items as an expense (Cost of Goods Sold). This process accurately reflects the business's financial performance by tracking what was sold and at what cost.

A sale increases assets (cash or accounts receivable) and increases owner's equity (due to revenue).

Cash purchases use immediate payment, while credit purchases delay payment, increasing liabilities.

Property, Plant, and Equipment - These are long-term assets used in a business's operations.

Income earned by allowing someone to use your intellectual property or resources.

Modified Accelerated Cost Recovery System, an IRS-accepted depreciation method.

Revenues are income from sales, while expenses are costs incurred in generating that income.

Sales transactions can be either cash sales, where payment is received immediately, or sales on account, where payment is due at a later date.

Cash and accounts receivable have a natural debit balance. This means they increase with a debit entry and decrease with a credit entry.

A cash sale increases the cash account as money is received. A sale on account increases accounts receivable as the customer owes money.

Revenue accounts have a natural credit balance. This means they increase with a credit entry and decrease with a debit entry.