Chapter One Accounting In Action

Financial Analysis – A process designed to examine a business' current status and future potential so as to determine its worthiness for debt or equity investment.
Asset account – Accounts receivable is an
income statement – a financial statement showing the revenue and expenses for a fiscal
period
ethics – a code of conduct that applies to everyday life
withdrawal – removal of cash or other assets from a business or account
transaction – any activity of a business enterprise that involves the exchange of values
Merchandising Business – buys finished products and resells them to individuals or other businesses
Treasury shares – the number of shares ever bought back
balance sheet, income statement, statement of cash flows – 3 financial statements
cash – Money and any medium of exchange that a bank accepts at face value.
It is a violation of federal law to destroy or deface any labeling required on a pesticide or herbicide.
Sole Proprietorship – a single owner business
Adjusting Entries – closing the revenue and expenses accounts that have been changed in the current fiscal period. These account amounts are entered into Income Summary and the left of from that (because the revenue and expenses do not have to equal one another) goes into the capital account as either a net loss or net gain.
The Fundamental Accounting Equation – Assets = Liabilities + Owner Equity
temporary accounts that DO closed – expenses
revenue
withdrawal
income summary
14. The operating cycle of a company is the
1. time it takes to use cash to develop a product or service and get it ready to sell
2. time it takes to use cash to develop a product or service, sell it, and collect from the customers
3. time it takes to develop a product or service and to sell it
4. period of time represented on the income statement and cash flow statement – 2. time it takes to use cash to develop a product or service, sell it, and collect from the customers
It is а viоlаtiоn оf federаl law to destroy or deface any labeling required on a pesticide or herbicide.
Balance Sheet – It tells us a business financial position at a particular point in time
formula for depreciation expense – original cost – salvage value / useful life
Cost object – Something for which costs are measured and assigned

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