1. What is Accounting?

Accounting is a art in which we study recording (Journalize) ,

Classification (Ledger), Summarize (Trial Balance) and Interpretation of
Financial statements.
2. What is financial Accounting?
Financial accounting is the field of accounting concerned with the
summary, analysis and reporting of financial transactions related to a
business. This involves the preparation of financial statements available
for public use.
3. Difference b/w Accounting and Financial Accounting?

4. What is credit and debit?

Anything which is present in the business or controlled by the business

from which benefit will flow into the business is known as Debit.

Anything which is present in the business or controlled by the business

from which benefit will flow out from the business is known as Credit.
5. What is journal?
In accounting and bookkeeping, a journal is a record of financial
transactions in order by date.
6. What is ledger?
A ledger account contains a record of business transactions. It is a
separate record within the general ledger that is assigned to a specific
asset, liability, equity item, revenue type, or expense type. Examples of
ledger accounts are: Cash. Accounts receivable.
7. What is trial balance?
Trial Balance is a list of closing balances of ledger accounts on a certain
date and is the first step towards the preparation of financial
statements. It is usually prepared at the end of an accounting period to
assist in the drafting of financial statements.
8. What is adjusted trail balance?
An adjusted trial balance is a listing of all the account titles and balances
contained in the general ledger after the adjusting entries for an
accounting period have been posted to the accounts. The adjusted trial
balance is an internal document and is not a financial statement.
 9. How many financial statements are there?
There are five Financial Statements in Accounting.
10.Name all financial statements?
Income Statement
Owner’s Equity Statement
Balance Sheet
Cash Flow Statement
Notes to the Account

11.What is the format of income statement as studied in the class?

Expenses minus Revenue = Net Income
Sales
Less: Sales Discount
Sales Allowances and Returns
Net Sales
Less: CGS
Gross Profit
Less: Selling & Administrative Expenses
Net Income
12.What is accounting equation?
The fundamental accounting equation, also called the balance sheet
equation, represents the relationship between the assets, liabilities, and
owner's equity of a person or business. It is the foundation for the
double-entry bookkeeping system. For each transaction, the total debits
equal the total credits.
13.What is Accounting cycle?
Accounting cycle:
The accounting cycle is the holistic process of recording and
processing all financial transactions of a company, from when the transaction
occur, to its representation on the financial statements, to closing the
accounts.
Steps in accounting cycle are
 Transactions
 Journal entries
 Posting to general leger
 Trial balance
 Worksheet
 Adjusting entries
 Financial statements
 Closing entries

14.What is direct expense & Indirect expense with examples?

Direct expense:
It is an expense incurred that varies directly with changes in the
volume of a cost object. For example, if you pay for painting or repairs only
in the area used for business, this would be a direct expense.
Indirect expense:
These are expenses that are incurred to operate a business as a
whole or a segment of business, and so cannot be directly associated with a
cost object. Examples of indirect expenses generally include insurance,
utilities, and general home repairs.
15.Types of assets with examples?

Current Assets

 Liquid Assets
 Operating Assets

Cash
Bank Accounts
Short-term Inventory
A/R

Non-Current Assets
 Tangible Assets:
Land
Plants
Machinery
Truck
Computer
Non Tangible Assets
Goodwill
Logo
Trademarks
Copyright
Patents
Software

16.Types of liabilities with examples?

Current Liability
A/P
Notes P/A
Accrued Expense (Electricity Bill)
Unearned income

Non Current Liability

Loan Notes
Debentures
Bonds
Capital
17.What is Cost of goods sold?
Cost of goods sold represents the sum of the costs of all goods which
have been sold during the accounting period.

18.What is multiple step income statement?

Sales
Less: Sales Discount
Sales Allowances and Returns
Net Sales
Less: CGS
Gross Profit
Less: Selling & Administrative Expenses
Net Income
19.What is single step income statement?
Revenue
Less: Expenses
Net Income
20.What are plant assets?
A plant asset is an asset with a useful life of more than one year that is
used in producing revenues in a business's operations. Plant assets are
also known as fixed assets.
21.What is depreciation and how many methods are there with
illustration.
Depreciation is the process of allocating the cost of a plant asset to
expense in the Accounting periods benefiting from its use.
Methods:
1. Straight Line Method:
2. Double Declining Method
3. Declining Balance Method
4. Partial Year Depreciation
22.Difference between depreciation and amortization?
The key difference between amortization and depreciation is that
amortization is used for intangible assets, while depreciation is used for
tangible assets. Another major difference is that amortization is almost
always implemented using the straight-line method, whereas
depreciation can be implemented using either the straight-line or
accelerated method. Finally, because they are intangible, amortized
assets do not have a salvage value, which is the estimated resale value
of an asset at the end of its useful life. Depreciated assets, by contrast,
often have a salvage value. An asset's salvage value must be subtracted
from its cost to determine the amount in which it can be depreciated.