Bookkeeping Week 2 Exam With Solutions 100% Correct
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Course
Bookkeeping
Institution
Bookkeeping
Bookkeeping Week 2 Exam With Solutions
100% Correct
What "is a list of all of the accounts that can be impacted by their financial transactions,
organized by assets the company owns, liabilities the company owes, equity accounts, revenue
accounts and expense accounts"? Chart of accounts
The...
Bookkeeping Week 2 Exam With Solutions
100% Correct
What "is a list of all of the accounts that can be impacted by their financial transactions,
organized by assets the company owns, liabilities the company owes, equity accounts, revenue
accounts and expense accounts"? Chart of accounts
The chart of accounts is the backbone of a business's financial organization; it is a list of all of
the accounts that can be impacted by their financial transactions, organized by assets the
company owns, liabilities the company owes, equity accounts, revenue accounts, and expense
accounts.
What is one of the most common bookkeeping mistakes that business owners make They
have too many accounts in their chart
Assessing what accounts are listed in the chart of accounts will be an ongoing task for you.
Having too many accounts on a chart of accounts can make information more dispersed and
complicated than it needs to be. For example, CPA Mike Jesowshek notes that one of the most
common bookkeeping mistakes that business owners make is having too many accounts in their
chart, such that the data becomes diluted and not useful. Jesowshek notes that bookkeepers can
help their clients out in these situations by simplifying related accounts into one account. "Unless
there are significant expenses that make separating it out useful," he notes.
, Bookkeeping Week 2 Exam With Solutions
100% Correct
What is a potential downfall to the cash method of accounting? It isn't great for big-
picture financial planning
Some potential downfalls to the cash method of accounting are as follows:
● It doesn't give you robust information about outstanding invoices or bills that need to be paid,
since financial transactions aren't recorded until money is exchanged.
● It isn't great for big-picture financial planning. For example, if you receive a big deposit but
have a variety of expenses to be paid at a later date, this will not show up in the books until later.
This gives the illusion of having a "really great" (month, quarter, etc.) at the time of the deposit,
and a "really bad" month when the payments become due, when in reality it is all balancing out.
According to a business bank account, the following transactions have taken place:
The business owner invested $2,000 in their own business for start-up costs.
A purchase of $500 worth of dog grooming supplies was made from a local pet store.
The business owner took out a $1,000 loan, which they then use to purchase a dog-bathing tub.
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