Accounting Methods Fundamentals
This worksheet covers fundamental accounting methods, including financial statements, depreciation, and inventory costing, suitable for Grade 11 financial literacy.
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Accounting Methods Fundamentals
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Read each question carefully and provide your best answer. Show all calculations where necessary.
1. Which financial statement reports a company's assets, liabilities, and equity at a specific point in time?
Income Statement
Statement of Cash Flows
Balance Sheet
Statement of Owner's Equity
2. The matching principle in accounting primarily dictates:
That all revenues are recognized when cash is received.
That expenses are recognized in the same period as the revenues they help generate.
That assets are recorded at their fair market value.
That financial statements must be prepared annually.
1. The accrual basis of accounting recognizes revenues when cash is received and expenses when cash is paid.
True
False
2. Depreciation is the process of allocating the cost of a tangible asset over its useful life.
True
False
1. The method of depreciation expenses an equal amount of the asset's cost each year.
2. FIFO stands for and assumes that the first goods purchased are the first ones sold.
3. The accounting equation is Assets = Liabilities + .
1. Explain the difference between revenue recognition under the cash basis and the accrual basis of accounting.
Match each accounting term on the left with its definition on the right.
1. LIFO
a. Cost of assets minus accumulated depreciation
2. Net Income
b. Last-In, First-Out inventory method
3. Book Value
c. Revenues minus expenses
1. A company purchases a machine for $50,000. It has an estimated useful life of 5 years and a salvage value of $5,000. Calculate the annual depreciation expense using the straight-line method.