Financial Accounting Ch 8

Cost of Goods Sold Equation – Beginning Inventory + Cost of Goods Purchased = Costs of Goods Available for Sale – Ending Inventory = Cost of Goods Sold
Effective Tax Rate – Tax Expense/Pretax Income
Cost Principle – aquired assets and service should be recorded at historical cost
An increase in which of the accounts will increase owner's equity? – Client fees
Contribution approach – an income statement format that organizes costs by their behavior. costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes (p43)
What is Equity? – Contributed Capital and retained earnings
What does FICA stand for? – Federal insurance contribution act
In “The Wife of His Youth,” what is the relationship between Mr. Ryder, Sam, and Liza Jane?
Included in a trial balance – Title of accounts
balance of accounts
totals of debits and credits
tested equality
account – the record of the changes that have occurred in a particular asset, liability, or stockholders equity during a period. The basic summary device of accounting.
accumulated depreciation – a contra-asset account that summarizes or accumulates the amount of depreciation that has been taken on an asset
In “The Wife оf His Yоuth,” whаt is the relаtiоnship between Mr. Ryder, Sаm, and Liza Jane?
Fully Depreciated Assets – Have zero residual value even though you may use the equipment for several more years, you will not record any more depreciation
– When they dispose of this equipment, they remove both the asset's cost and accumulated depreciation from the books
*Journal Entry: debit accumulated depreciation and credit the asset (full)
9. Which statement below best describes the accounting equation?
A. The change in retained earnings equals net income less dividends.
B. Equality of revenue and expense transactions over time.
C. Resources of the company equal creditors' and owners' claims to those resources.
D. Financing activities equal investing and operating activities. – C. Resources of the company equal creditors' and owners' claims to those resources.
Account Number – The number given to an account
Indefinite Lives of Intangible Assets – Tested for loss in value (impairment)
– Ex) Goodwill
Revenues – The gross increase in stockholders equity resulting from business activities entered into for the purpose of earning income.

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