Financial Accounting Ratios

Purchases discount – a cash discount on purchases taken by a customer
financing – – acquisition of capital from investors or creditors and payments to those same
investors or creditors by the business
Generally accepted accounting principles – derive their credibility and authority from general recognition and acceptance by the accounting profession.
Dishonored (NSF) Check – A check returned to the depositor unpaid because of insufficient funds in the drawer's account; also called an NSF check.
The natural business yr – the fiscal yr ends when business is the slowest, it makes it easier for them
customer order – customer places and order for what they want to purchase from us
The control process begins with establishing standards.
Debt to equity – Total liabilities / Total Equity
capital expenditures – substantial amounts spent to improve the quality or extend the life of an asset
The cоntrоl prоcess begins with estаblishing stаndаrds.
Period costs – Not product cost (ie S&A expenses, commission, advertising, executive salaries) ALWAYS treated as an expense
Closing Entries – Journal entries that transfer the results of operations (net income or net loss) to owner's equity and reduce the revenue, expense, and drawing account balances to zero.
1. Close revenue accounts and cost of goods sold accounts with credit balances to Income Summary.
2. Close expense accounts and cost of goods sold accounts with debit balances to Income Summary.
3. Close Income Summary, which now reflects the net income or loss for the period, to owner's capital.
4. Close the drawing account to owner's capital.
Asset – Property of monetary value owned by a business.
Property rights – creditors' and owners' financial claims to the assets of a business.
Managerial Accounting – the field of accounting that provided internal reports to help users make decisions about their companies

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