Account14

What is the equation for Acid-Test Ratio in accounting?

The equation for Acid-Test Ratio in accounting Acid-Test Ratio = (Current assets – Inventory) / Current Liabilities

List out things that fall under intangible asset?

Things that fall under intangible asset are,

Patents

Copyrights

Trademarks

Brand names

Domain names, and so on.

Mention what is trial balance in accounting?

In accounting, trial balance is an accounting report that lists the balances in each of an organization’s general ledger accounts. This is done at the end of posting journal entry to ensure that there are no posting errors.

Where a cash discount should be recorded in journal entry?

A cash discount should be recorded in journal entry as a reduction of expense in “cash account”.

Mention why some asset accounts have a credit balance?

Some asset accounts have a credit balance due to following reasons, Receiving and posting an amount that was higher than the recorded receivable Expenses occurred faster than the agreed upon prepayments An error caused by posting an amount to a wrong account The amount of checks written exceeded the positive amount in the Cash account Continuing to amortize or depreciate an asset after its balance has reached zero.

Define what is Bad debt expense?

A Bad debt expense is the amount of an account receivable that is considered to NOT be collectible.

Explain what is the Master Account?

A Master Account has subsidiary accounts. A master account receivable could be anything, it could be account receivable for various individual receivable accounts.

Mention in which account does the unpresented cheque will get recorded?

The unpresented cheque will get recorded as a credit to the cash account in the company’s General ledger.

What is 'Accounting'?

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions.  The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period. Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.