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HBX Core Exam Financial Accounting With 100% Correct And Verified Answers
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HBX Core Exam Financial Accounting With 100% Correct And Verified Answers
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HBX Core Exam Financial AccountingWith 100% Correct And Verified Answers
Accelerated Depreciation Methods - Correct Answer-
Depreciation methods that recognize more depreciation
expense in the early years and less in the later years. Double-
declining balance is an example of an accelerated
depreciation method.
Accounting Equation - Correct Answer-Assets = Liabilities +
Owners' Equity. This equation is fundamental and must
always be true in double entry accounting.
Accounting Period - Correct Answer-The period of time for
which the financial results are reported; typically either a
month or a quarter or a year.
Accounts Payable - Correct Answer-Liability account used
to show the obligation to pay suppliers who have provided
goods or services on credit terms.
Accounts Payable Turnover - Correct Answer-Accounts
Payable Turnover is a ratio that is used to measure how
efficiently a business is paying its vendors. It is calculated by
dividing the credit purchases for the period by the average
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,accounts payable balance for the period. In the absence of
credit purchases information, we may use cost of goods sold
as a substitute. The ratio represents how many times the
accounts payable turned over during the period. For most
ratios in this course, we use averages when calculating ratios
with balance sheet numbers, but this is not necessary and
some may choose to use beginning or ending balances.
Accounts Receivable - Correct Answer-Asset account used to
show the claim to receive cash at some future date for goods
or services that have been supplied to a customer on credit
terms.
Accounts Receivable Turnover - Correct Answer-Accounts
Receivable Turnover is a ratio that is used to measure how
efficiently a business is collecting receivables from its
customers. It is calculated by dividing the credit sales for the
period by the average accounts receivable balance for the
period. In the absence of credit sales information, we may
use total sales as a substitute. The ratio represents how many
times the accounts receivable turned over during the period.
For most ratios in this course, we use averages when
calculating ratios with balance sheet numbers, but this is not
necessary and some may choose to use beginning or ending
balances.
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,Accrual - Correct Answer-A revenue amount that is
recorded after the revenue is earned but before the payment
is received or an expense amount that is recorded after it has
been incurred but before the payment has been made. In
either case, for an accrual the exchange of cash is expected at
some future point after the initial revenue or expense is
recognized.
Accrual Accounting Method - Correct Answer-This is the
accounting method taught in this course, followed by most
companies, and required under US GAAP and IFRS. The
method follows the revenue recognition principle, which says
that revenue should be recognized in the period in which it is
earned and realizable, not necessarily when the cash is
received and the matching principle which says that
expenses should be recognized in the period in which the
related revenue is recognized rather than when the related
cash is paid.
Accrued Expenses - Correct Answer-Liability account used
to record amounts at the end of an accounting period to
recognize expenses that were incurred in the period but for
which no invoice has yet been received nor payment has yet
been made. Examples are salaries/wages payable, accrued
rent expense, accrued legal fees. When the accrual is made,
the debit is to the appropriate expense account (payroll
expense, rent expense, legal expense) and the credit is to the
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, accrued expense account, which is a liability because it
represents an obligation which will need to be
paid in the future. Remember accrued
expenses are NOT expenses.
Accrued Liability - Correct Answer-Liability
accounts that record expenses that have been
recognized on the income statement but have
not yet been paid. Similar to accrued
expenses.
Accrued Payroll - Correct Answer-An accrued
expense recorded at the end of a financial
period for amounts of payroll that have been
worked but not yet paid. It is a common type
of accrued expense. See also Salaries/Wages
Payable.
Accrued Revenue - Correct Answer-An asset
account that records revenue that has been
earned and recognized on the income
statement but not yet paid for by the
customer. At the time of the accrual, we debit
the receivable account and credit the
appropriate accrued revenue account. When
the cash transfer ultimately occurs, we debit
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