Accounting 2301 First Exam

price-earnings ratio – the stock price dividend by earnings per share so that both stock price and earnings are expressed in a per share basis
An unfavorable variable overhead efficiency variance indicates that variable overhead costs were wasted and inefficiently used. – False
Net Loss – Expenses are greater than revenue.
Dr – the abbreviation for debit
liabilities – Highly-likely future sacrifices of resources; claims on assets reflected in terms on a piece of paper. Payables, accruals
Compensation Record – See individuals earnings record. (An employee record that contains information needed to compute earnings and complete tax reports.)
cash disbursements – pay by check
explain the accounting process – to MEASURE economic activity and COMMUNICATE it
1. identify relevant economic activity
2. quantify these activites
3. record the results
balance sheet – Statement of the financial position of the hospitality establishment on a given date, giving the account balances for assets, liabilities, and ownership equity
The general ledger system of an organization should be designed to serve the information requirements of both internal and external users. This means that the system should support
Employee FICA taxes – Employees must pay withheld taxes to the IRS
income statement? – gives company's revenues and expenses and net income over a period of time due to earning activities.
An Audit – An audit does not prove that financial statements are 100% accurate. The audit opinion states the financial statements are not materially misstated in accordance with GAAP. It is not a statement regarding how good or bad the company will perform in the future. It lends credibility to the statements when an independent third party reviews the statements.
Disbursements – A cash outflow of money used in operating the business.
Extraordinary Items – unusual and infrequent; flood in the desert of california
Direct Labor – workers time spend sanding and varnishing the furniture
corporation – a business organized under state or federal statutes as a seperate legal entity
The generаl ledger system оf аn оrgаnizatiоn should be designed to serve the information requirements of both internal and external users. This means that the system should support
sole proprietorship – work alone
Objectivity Principle – The objectivity principal states that transactions will be recorded on the basis of objective evidence. It means that different people looking at the evidence will arrive at the same values for the transaction (Similar to Reliability Characteristic.)
credit memorandum – Source document prepared by the vendor showing the amount deducted for returns and allowances

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