shows Asset at the left side of the report while Liabilities and Owners Equity

Shows asset at the left side of the report while

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shows Asset at the left side of the report, while Liabilities and Owner’s Equity are on the right. The three elements are arranged horizontally. On the other hand, in the Report Form, Assets are shown first followed by Liabilities and Owner’s Equity in a vertical order. 12. Why is the income Statement worded “for the period ended” or “for the year ended” while a Balance Sheet is worded “ as of” ? Income Statement is worded “for the period ended” or “for the year ended” because it is prepared at the end of the accounting period and the accounts here will be closed. Balance sheet is worded “As of” because It is prepared on a specific or particular date and the accounts here are permanent accounts, they do not close or end at the end of the accounting year. 13. Between an Income statement and a Balance sheet, which of the two is more important to the user? Balance Sheet is more important because it gives a snapshot of a business’ financial health on a given moment in time. 14. What are permanent accounts? Permanent accounts are accounts that are not closed at the end of the accounting period, therefore they are measured cumulatively. This refers to the Assets, Liabilities and Owner’s equity. 15. What are considered as temporary accounts? Temporary Accounts are accounts that are use to compile transactions that impact profit or loss of a business during a year. These accounts begins with a zero balance at the start of the year then its ending balance is shifted to a different account at the end of the year. This refers to revenue, expense, gain or loss, and Income summary accounts. 16. How is interest as finance charge being treated in the Income statement of a Service Concern? Interest as finance charge is treated as expense in a Service Concern Income Statement.
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17. When do we use a report form of a Balance Sheet?
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