How do I learn more about the CPA Exam?
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You can learn more about the Uniform CPA Exam at the following site: cpa-exam.org
You will also find information on the Uniform CPA Exam on the site of the National Association of State Boards of Accountancy (NASBA).
Both of these sites are now listed on the Helpful Links page of AccountingCoach.com.
What is a deferred credit?
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A deferred credit could mean money received in advance of it being earned, such as deferred revenue, unearned revenue, or customer advances. A deferred credit could also result from complicated transactions where a credit amount arises, but the amount is not revenue.
A deferred credit is reported as a liability on the balance sheet. Depending on […]
What is recorded in the Wages and Salaries Expense account?
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Accounts such as Wages and Salaries Expense, Wages Expense, and Salaries Expense are used to record the gross wages and salaries earned by employees during the accounting period. Gross wages and salaries means the amount before payroll taxes and other withholdings.
Under accrual accounting (as opposed to the cash basis of accounting) wages expense is the hourly pay rate […]
Should an owner?s compensation be recorded as an expense or in the Drawing account?
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If the enterprise is a sole proprietorship, the owner’s compensation should be debited to the Drawing account.
If the enterprise is a corporation, the owner’s gross compensation should be debited to a salary expense account.
You can learn more about accounting and bookkeeping at AccountingCoach.com.
Do variance accounts have an impact on financial statements? Or are they for performance evaluation only?
Since the financial statements must reflect the cost principle, both the standard costs and the variances must be included in the financial statements.
For example, if a direct material has a standard cost of $400 but the company paid $422, the financial statement must report $422 (the standard cost of $420 plus the price variance of […]
What is the distinction between debtor and creditor?
A debtor is a person or enterprise that owes money to another party. (The party to whom the money is owed is often a supplier or bank that will be referred to as the creditor.)
A creditor is a person, bank, or other enterprise that has lent money or extended credit to another party. (The party to whom the credit has been […]
What is credit analysis and financial analysis?
Credit analysis is associated with the decision to grant credit to a customer. It is also part of a bank’s lending procedures for making a loan and monitoring the borrower’s creditworthiness.
I believe that financial analysis has a broader focus than credit analysis. Financial analysis would also include calculations such as return on equity, return on assets, price earning ratios, […]
What is variance analysis?
Variance analysis is usually associated with explaining the difference (or variance) between actual costs and the standard costs allowed for the good output. For example, the difference in materials costs can be divided into a materials price variance and a materials usage variance. The difference between the actual direct labor costs and the standard direct labor […]
How does the accounting equation stay in balance when the monthly rent is paid?
A company’s payment of each month’s rent is recorded with a credit to Cash and a debit to Rent Expense. The credit to Cash causes a reduction in the company’s assets. The debit to Rent Expense causes owner’s equity (or stockholders’ equity) to decrease.
The reason the debit causes owner’s equity to decrease is that expenses […]
What is Form 10-K?
Form 10-K is a corporation’s annual report filed with the U.S. Securities and Exchange Commission (SEC). Form 10-K is required for U.S. corporations whose stock is publicly traded.
Form 10-K contains a wealth of information on the corporation in general such as its products, sales, markets, risks, officers, directors, and more. A significant portion of the […]