ACCT 2102 Questions and Answers | Latest Version | 2024/2025 | 100% Verified
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Course
ACCT 2102
Institution
ACCT 2102
ACCT 2102 Questions and Answers |
Latest Version | 2024/2025 | 100%
Verified
What is the definition of a contingent liability?
A contingent liability is a potential obligation that may arise depending on the outcome of a
future event, such as a lawsuit.
Explain the term "capital expend...
ACCT 2102 Questions and Answers |
Latest Version | 2024/2025 | 100%
Verified
What is the definition of a contingent liability?
✔✔ A contingent liability is a potential obligation that may arise depending on the outcome of a
future event, such as a lawsuit.
Explain the term "capital expenditures."
✔✔ Capital expenditures are funds used by a company to acquire or upgrade physical assets
such as property, buildings, or equipment.
What is an operating cycle?
✔✔ An operating cycle is the time it takes for a company to purchase inventory, sell it, and
collect cash from customers.
Define "inventory turnover ratio."
✔✔ The inventory turnover ratio measures how many times a company's inventory is sold and
replaced over a period.
1
,What is the purpose of a bank reconciliation?
✔✔ A bank reconciliation is used to ensure that the company’s records (book balance) match the
bank’s records, identifying any discrepancies.
What does "amortization" refer to in accounting?
✔✔ Amortization refers to the gradual reduction of an intangible asset’s value over time, similar
to depreciation for tangible assets.
What is a classified balance sheet?
✔✔ A classified balance sheet organizes assets and liabilities into current and non-current
categories, providing a clearer financial picture.
Explain "net income."
✔✔ Net income is the total profit of a company after all expenses, taxes, and costs have been
subtracted from total revenue.
What is the difference between cash basis and accrual basis accounting?
✔✔ Cash basis accounting recognizes revenue and expenses only when cash is exchanged, while
accrual basis accounting recognizes them when earned or incurred.
2
, What is a petty cash fund?
✔✔ A petty cash fund is a small amount of cash kept on hand for minor expenses, with detailed
records maintained for accountability.
Define "pro forma financial statements."
✔✔ Pro forma financial statements are projections based on hypothetical scenarios, often used
for planning and forecasting.
What is the difference between a primary and a secondary market?
✔✔ The primary market is where new securities are issued and sold for the first time, while the
secondary market is where existing securities are traded.
Explain the term "owner’s equity."
✔✔ Owner’s equity represents the owner’s claim on the assets of a business after all liabilities
have been deducted.
What is a financial audit?
3
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