Question

Strong CHapter z Recording Business Transactions Directed Reading Guide LOI, what is an account? a) In your own words, what is an account? i) Assets: List some examples of assets. (CASH), (Deposits) and (laventories Liabilities: List some examples of liabilities( Warranty Liability), Salaries Payable and Customer deposits ii) iii) Equity: List the four equity accounts. b) In your own words, what is a chart of accounts? c) In your own words, what is a ledger?

Answer 1

Definitions of various terms in accounting which enable them to identify the meaning of each term and make the concept clear to them.

Account: Account is a record in general ledger that used to collect and record transactons taken place in the Organaisation in the form of debit or credit amount. It Reflects Reflects the relationship between customer and the organaisation Ex:- if customer wants to purchase goods on credit from seller, there seller will have Accounts Receivable and purchaser have accounts payable Asset Asset is a resourse controlled by the enterprise which is a result of past events from which future Economic Benefits are expected Cash : - Cash is a current asset account which consistes of currency, coins, Undeposited Checks etc., Deposits:- It is an asset eighter current or non current based on Nature of deposit made Ex:- Short Term deposits, Recurring deposits, Fixed deposits Inventories :- Typically involves goods which used to be purchase and sale in the ordinary course of business Ex:-Raw Material, Work in Progress and Finished Goods ii)Liability Liability is the obligation arises to organaisation in the ordinary course of opeartions. Recorded on the right side of balancesheet Warranty Liability The Liability account that reports the estimated amount that the company expected to spend to Repair and replace a product during warranty period as a result of sale

Salaries Payable :-Salary payable is the amount owed to employees on account of receipt of services from them. Customer Deposits:- Customer Deposits is the amount received from customers before receipts of Goods or Services. iii Four Equity Accounts:- The following are the four equity Account 2) Preferred Stock 3) Contributed Surplus 4) Additional Paid in Capital Chart of Accounts: Chart of Accounts is the names of list of accounts any organaisation identify and made available for recording transactions takes place in the organaisation in the ordinary course of business or other. Ex: Assets accouts, Liability Accounts, expenditure and income Account. Ledger: The accounts book used to record transactions takes place in the oganaitsation and measure the same in the form economic value. It record transactions in the for of debits and credits to particular account to which Transaction belongs.