Accounting Unit 2

CONSERVATISM – No profits are anticipated and all possible losses are recognized.
A company's operating cycle is:
a.
An entire year
b.
The average time it takes for a business to sell its merchandise inventory
c.
The average time it takes for a company to buy inventory, sell it to customers, and to collect cash from customers
d.
The average time before a business must reorder inventory – c.
The average time it takes for a company to buy inventory, sell it to customers, and to collect cash from customers
cargo por impuesto a las ganancias – income tax expense
(on Financial statements)Earnings for the period – income statement
An item which has been paid for and will be consumed but that not yet been used is: – Inventory
useful life – how long a business will expect to keep that asset
maturity date – date on which the face value must be repaid to the creditor
What is Relevance? – Information must be relevant to the decision-making needs of the business. If the information influences economic decision of the business then it is considered relevant (Information must be important/useful)
What applies to accounting – -Organizing
-Maintaining
-Recording
-Analyze financial activity
Matthew works as an accountant in a mobile phone company. During lunch he spoke to Peter from the sales department about wanting to buy a mobile phone for himself. Peter persuaded Matthew to buy a mobile phone from the sales department itself, which Matthew did. Matthew is a(n) ________.
long-term investments – investments in securities
investments in tangible fixed assets not currently in operations
investments set aside in special funds
investments in nonconsolidated subsidiaries
Warranty Liabilities – Seller's obligation to replace or correct a product that fails to perform as expected within a specified period
Which of the following best describes Owner's Capital on a proprietorship's balance sheet?
a. The owner's original contribution to the company
b. The owner's original contribution to the company plus the cumulative profits of the company
c. The owner's original contribution to the company plus any subsequent direct contributions plus the cumulative profits of the company minus any withdrawals that the owner has made
d. The owner's original contribution to the company minus any withdrawals that the owner has made – c. The owner's original contribution to the company plus any subsequent direct contributions plus the cumulative profits of the company minus any withdrawals that the owner has made
Rules of double entry bookkeeping – Every transaction involves at least one debit and one credit
Double entry is self checking
Special Endorsement – An endorsement indicating a new owner of a check.
Debit Merchandise & Credit Account payable – when a director buys a casket on credit the entry is
Mаtthew wоrks аs аn accоuntant in a mоbile phone company. During lunch he spoke to Peter from the sales department about wanting to buy a mobile phone for himself. Peter persuaded Matthew to buy a mobile phone from the sales department itself, which Matthew did. Matthew is a(n) ________.
Normal Balance – whichever side of the T-Account leads to an increase
Stockholders equity – Акционерный капитал
CIA – Certified Internal Auditors

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