Accounting I: Financial Accounting Ch 2

Accounting – is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.
Deferred income – income received but not yet earned is
Executive committee – The executive committee is made up of all the department heads of a hotel. This group comes together for meetings to make decisions and ensure all information is relayed correctly.
Payroll Register – A business form used to record payroll information
FICA taxes – based on the Federal Insurance Contributions Act. Tax withheld from employees paychecks
purchase on account – a transaction in which the merchandise purchased is to be paid for later
[ 2 ] Which of the following statements is correct regarding financial decision making?   A. Opportunity cost is recorded as a normal business expense. B. The accounting rate of return considers the time value of money.   C. A strength of the payback method is that it is based on profitability. D. Capital budgeting is based on predictions of an uncertain future.  
Profit Margin Ratio – Net Income/Sales
Accounts Receivable Turnover – (Sales Revenue/ Ave. Accounts Receivable)
current liabilities – obligations that a company reasonably expects to liquidate either through the use of current assets or the creation of other current liabilities
Equities – Finical rights of the assets
What is depreciation – The process of systematically allocating the cost of a long-term asset to each of the period it is used
separate entity concept – the concept by which a business is treated as a separate economic or account entity. The business stands by itself, separate from its owner's creditors and customers.
[ 2 ] Which оf the fоllоwing stаtements is correct regаrding finаncial decision making?   A. Opportunity cost is recorded as a normal business expense. B. The accounting rate of return considers the time value of money.   C. A strength of the payback method is that it is based on profitability. D. Capital budgeting is based on predictions of an uncertain future.  
Permanent (real) accounts – Accounts that relate to one or more accounting periods. Consist of all balance sheet accounts. Balances are carried forward to next accounting period.
opening an account – writing an account title and number on the heading of an account

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