Accounting Chapter 4 Vocab

Net profit margin equation – Net income/net sales
Owner investments – Assets put into the business by the owner
Net income is Gross profit less
A. Administrative expenses.
B. Operating expenses.
C. Other expenses and losses.
D. Selling expenses. – B
Goodwill – Occurs when one company buys another company
Corporation – A type of ownership structure in which stockholders owns the business. Owner have very little influence on business decisions and owners risk is usually limited into their initial investment
1930s – security act securities exchange
Managerial Accounting – A field of accounting that provides economic and financial information for managers and other internal users
In general, sinkholes are found in areas
cost driver – a factor, such as machine-hours, beds, occupied, computer time, r flight-hours, that causes overhead costs.
Current Ratio – current assets/ current liabilities
Conceptual framework – An attempt to develop some basic concepts of accounting to help accountants determine how transactions should be accounted for
Sale on account – A sale for which payment will be received at a later date
Equity Inv. – Significant Influence – Equity Method – investment at cost
Share of investee income increases investment amount (balance sheet and income statement affected)
Dividends decrease investment amount (only balance sheet affected)
Consistent Reporting – Using the same accounting procedures every year
In generаl, sinkhоles аre fоund in аreas
Receivable – is used to refer to an asset that promises a future INFLOW of resources.

*Accounts Receivable

maintenance and repairs expense – operating expense, IS, debit
Posting – Copying amounts from the journal to the ledger
GAAP – the rules that most companies have to follow in preparing their financial reports
Partnership – Same as proprietorship, but more than one. Recommended: formal partnership agreement.

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