For this discussion, assume the role of a financial manager in a company, and assume that you have just hired a new bookkeeper to join your team. You want to assess the new hire's understanding of the accounting processes as a whole, so you decide to ask a series of questions. Select three of the six questions listed below to ask your new bookkeeper, and describe the response you expect to hear:
- Define the accounting cycle.
- Explain the revenue principle and its implication on the financial statements.
- Define the matching principle and why it is critical in the preparation of the accrual-based financial statements.
- Compare and contrast a prepaid account and a deferred account. Give an example of each and how each affects the financial statements.
- Define and differentiate between the purpose of a journal entry, an adjusting entry, and a closing entry.
- Define the difference between a trial balance and a post-closing trial balance.
Ans: 1)Accounting cycle. The sequence of six steps in the processing of financial transactions (from the time they occur to... View the full answer
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DEFINE THE ACCOUNTING CIRCLE;The accounting cycle is the name given to the collective process of recording and processing the... View the full answer
- Realization concept in accounting, also known as revenue recognition principle, refers to the application of accruals concept towards the recognition of revenue (income). Under this principle, revenue is recognized by the seller when it is earned irrespective of whether cash from the transaction has been received or not. This refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of financial statements.
- Jul 20, 2016 at 1:27pm