21⟩ Explain about cost of goods sold?
These costs are reported as operating expenses on the income statement because of the matching principle. The revenues from the sale of merchandise must be matched with the cost of the merchandise that is sold.
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65 Account Manager Questions And Answers
22⟩ :: Tell me about selling, general and administrative expenses?
These costs are reported as operating expenses on the income statement because they pertain to operating the main business during that accounting period. These costs may have expired, may have been used up, or may not have a future value that can be measured.
23⟩ :: Define the stated interest rate of a bond payable?
The stated interest rate of a bond payable is the annual interest rate that is printed on the face of the bond. The stated interest rate multiplied by the bond's face amount (or par amount) results in the annual amount of interest that must be paid by the issuer of the bond. For example, if a corporation issues $10,000,000 of bonds having a stated interest rate of 6%, it is promising to pay interest of $600,000 each year (usually $300,000 semiannually).
The stated interest rate of a bond payable is also known as the face interest rate, the nominal interest rate, the contractual interest rate, and the coupon interest rate.
24⟩ Explain accrual method?
The accrual method of accounting reports revenues on the income statement when they are earned even if the customer will pay 30 days later. At the time that the revenues are earned the company will credit a revenue account and will debit the asset account Accounts Receivable. When the customer pays 30 days after the revenues were earned, the company will debit Cash and will credit Accounts Receivable.
The accrual method of accounting also requires that expenses and losses be reported on the income statement when they occur even if payment will take place 30 days later. For example, if a company has a $15,000 repair done on December 15 and the vendor allows for payment on January 15, the company will report a repair expense and a liability of $15,000 as of December 15. On January 15 the company will credit Cash and will debit the liability account.
25⟩ Explain the statement of cash flows?
The statement of cash flows is one of the main financial statements. It is to accompany the income statement, balance sheet, and statement of stockholders' equity. The statement of cash flows (also known as the cash flow statement) reports.
★ The major sources and uses of cash during the period of the income statement.
★ A reconciliation of the change in an organization's cash and cash equivalents (which are reported on the beginning and ending balance sheets).
★ Supplementary information including the amount of income taxes paid, the amount of interest paid, and significant noncash investing and financing activities (such as issuing common stock in exchange for land).
26⟩ Describe liability account?
A liability account is a general ledger account in which a company records its debt, obligations, customer deposits and customer prepayments, certain deferred income taxes, etc. that are the result of a past transaction. Common liability accounts under the accrual method of accounting include Accounts Payable, Accrued Liabilities (amounts owed but not yet recorded in Accounts Payable), Notes Payable, Unearned Revenues, Deferred Income Taxes (certain temporary timing differences), etc.
27⟩ Explain balance sheet accounts?
Balance sheet accounts are one of two types of general ledger accounts. Income statement accounts make up the other type. Balance sheet accounts are used to sort and store transactions involving assets, liabilities, and owner's or stockholders' equity. Examples of a corporation's balance sheet accounts include Cash, Accounts Receivable, Investments, Buildings, Equipment, Accumulated Depreciation, Notes Payable, Accounts Payable, Payroll Taxes Payable, Paid-in Capital, Retained Earnings, etc.
Balance sheet accounts are described as permanent or real accounts because at the end of the accounting year the balances in these accounts are not closed. Instead, the end-of-the-accounting-year balances will be carried forward to become the beginning balances in the next accounting year. This is different from the income statement accounts, which begin each accounting year with zero balances.
28⟩ What is "net" for account manager?
Net usually refers to the combination of positive and negative amounts. For example, the amount of net sales is the combination of the amount of gross sales (a positive amount) and some negative amounts such as sales returns, sales allowances, and sales discounts. Hence, if gross sales are 990 and sales returns are 10, sales allowances are 5, and sales discounts 20, the net sales are 955.
29⟩ What is net realizable value?
The amount to be received in the ordinary course of business minus the costs of completion and disposal.
30⟩ What is net property, plant and equipment?
The recorded costs of the tangible non-current assets used in the business minus the related accumulated depreciation.
31⟩ What is accounts receivable, net?
The recorded amount of accounts receivable minus the allowance for doubtful accounts.
32⟩ What is net cash provided by operating activities?
The combination of the cash inflows and the cash outflows from a company's operations (activities outside of its investing and financing activities).
33⟩ What is loss on disposal, net of tax?
An accounting loss on the sale of a business segment minus the income taxes that were saved (avoided, sheltered) because the loss was also deductible on the company's income tax return.
34⟩ What is net income?
Revenues and gains minus expenses and losses.
35⟩ Explain assets?
Assets are sometimes defined as resources or things of value that are owned by a company. Some examples of assets which are obvious and will be reported on a company's balance sheet include: cash, accounts receivable, inventory, investments, land, buildings, and equipment.
36⟩ Assets are sometimes defined as resources or things of value that are owned by a company. Some examples of assets which are obvious and will be reported on a company's balance sheet include cash, accounts receivable, inventory, investments, land, buildings, and equipment.
Gross profit is net sales minus the cost of goods sold. (Some people use the term gross margin and gross profit interchangeably. Others use gross margin to mean the gross profit ratio or the gross profit as a percentage of net sales.)
Gross profit is presented on a multiple-step income statement prior to deducting selling, general and administrative expenses and prior to non-operating revenues, non-operating expenses, gains and losses.
37⟩ Explain an accounting period?
An accounting period is a period of time such as the 12 months of January 1 through December 31, or the month of June, or the three months of July 1 through September 30. It is the period for which financial statements are prepared. For example, the income statement and the cash flow statement report the amounts occurring during the accounting period, and the balance sheet reports the amounts of assets and liabilties as of the final moment of the accounting period.
38⟩ What is income statement?
The income statement is a key financial statement which reports on a company's profitability during a relatively short period of time such as the past year, month, 13 weeks, etc. The heading of the income statement informs the reader of the period covered.
The main components of the income statement are:
★ Revenues
★ Expenses
★ Certain gains and losses
39⟩ What are revenues?
These are the amounts earned through the sale of goods and the providing of services.
40⟩ What are expenses?
These include the cost of goods sold, SG&A expenses, and interest expense.
