Accounting Chapter 5

Source Document – A business paper from which information is obtained for a journal entry
When the variable cost per unit decreases and the selling price per unit and other costs remain the same, the number of units that must be sold to break-even:
Stays the same.
The answer cannot be determined from the above information. – a.
creditor – a person or business to whom a liability is owed
Under a periodic system, the company uses separate accounts to record freight costs, returns, and discounts.
A. True
B. False – TRUE
​Providing Cash – Determining that the amount of cash agrees with the accounting records
Balance sheet – Snapshots of company's assets and liabilities / shows accumulated earnings or loses
Single step income statement – An income statement that shows only one step in determining net income
proprietorship – generally owned by one person, simple to establish, owner controlled, tax advantages
Owner investment – Resources such as cash or other assets that an owner invests into
Identify the Structure at “2” 
Principles & Assumptions of Accounting 1: Measurement/cost principle – accounting information is based on actual cost
Which of the following types effects would NOT be possible when a company records a transaction?
a. increase in an asset and increase in an expense
b. increase in one asset and decrease in another asset
c. increase in an asset and increase in a liability
d. decrease in an asset and increase in an expense
e. Increase in a liability and increase in an expense – a. increase in an asset and increase in an expense
Liability corp. – Owned by a few stockholders
Checking Account – A bank account from which payments can be ordered by a despositor
purchase allowance – is a reduction in the cost of defective or unacceptable merchandise that a buyer acquires
Standard costing is extremely useful when unique, high cost products are produced, as compared to the production of multiple products. – False
Identify the Structure аt “2” 
Partnership – a business owned by two or more persons associated as partners
source document – business paper from which info is obtained for a journal entry

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