NGUYEN DINH KHANH

Could you explain with your own words what are:

1. A general ledger, a trial balance, a profit and loss account or income

statement, a balance sheet?

A general ledger is often defined as a book of accounts. Today a ledger is

most likely an electronic record or file containing a group of accounts. For
example, a company's general ledger is the record containing all of its
asset, liability, owner equity, revenue, expense, gain, and loss accounts.
Each of these accounts will contain the amounts that are pertinent to the
account.

A trial balance is a listing of the name and the balance of each of the
accounts in the general ledger. The trial balance is not a financial
statement. Rather, it is an internal report that documents which accounts
have debit balances and which accounts have credit balances and proves
that the total of the debit balances is equal to the total of the credit
balances.

2. The on-going concern, the materiality and conservatism principles?

The on-going concern principle is the assumption that an entity will

remain in business for the foreseeable future. Conversely, this means the
entity will not be forced to halt operations and liquidate its assets in the
near term at what may be very low fire-sale prices. By making this
assumption, the accountant is justified in deferring the recognition of
certain expenses until a later period, when the entity will presumably still
be in business and using its assets in the most effective manner possible.

The materiality concept is the principle in accounting that trivial matters

are to be disregarded, and all important matters are to be disclosed. Items
that are important enough to matter are material items.

Conservatism principle is the general concept of recognizing expenses

and liabilities as soon as possible when there is uncertainty about the
outcome, but to only recognize revenues and assets when they are assured
of being received. Thus, when given a choice between several outcomes
where the probabilities of occurrence are equally likely, you should
recognize that transaction resulting in the lower amount of profit, or at least
the deferral of a profit. Similarly, if a choice of outcomes with similar
probabilities of occurrence will impact the value of an asset, recognize the
transaction resulting in a lower recorded asset valuation.
3. Revenue vs. Receipts, FS categories vs. FSLI’s

Revenue are recognized as soon as a product has been sold or a service has
been performed, regardless of when the money is actually received.
Receipts occur when cash is received

Financial statements are used to report the profitability and financial

stability of a company. To create a company’s financial statements,
information on revenues, expenses, assets, liabilities and equities are
presented in a predetermined format. Revenues and expenses appear on the
income statement, and assets, liabilities and equities are presented on the
balance sheet. As an equity item, retained earnings is placed on the right
side of the balance sheet, under “Shareholders’ Equity.”

In financial statement line items, items basically represent different

incomes and expenses accumulated under one head. For example,
Administration expenses is one line item, Selling expenses is separate
category and must be presented in the next line or different line. Same goes
for finance cost which is yet another line item. So, it simply means piece of
information pertaining to a particular category reported in separate line.