Principles Of Accounting Level 1 Chapter 1

management accounting – about financing, investing, and operating activities to achieve the goals of profitability and liquidity
"Total Asset Turnover" Classify, Calculate, and Interpret – Activity Ratio

Total Asset Turnover = [ Revenue / Average Total Assets ]

The effectiveness of the firm's use of its total assets to create revenue. Should be close to industry norm. High turnover: too few assets for potential sales; Low turnover: too much capital tired up in its asset base

IASB – International Accounting Standards Board – encourages global acceptance
general ledger – posting journal entries to the individual general ledger accounts creates a record of the impact of business transactions on each account used by a business
At the beginning of the period, assets were $450,000 and stockholders' equity was $200,000. During the year, assets increased by $50,000, liabilities decreases by $40,000, and stockholders' equity increased by $90,000. Beginning liabilities must have been: – $250,000
AUTHORIZATION – THE ACCEPTANCE BY THE STATE OF THE CORPORATE BY-LAWS
To issue a check without a PO – DR Expenditure
CR Accounts Payable
DR Accounts Payable
CR Cash
joint costs – costs that are incurred up to the split off point in a joint product process
Depreciation Expense – the periodic expense created by allocating the cost of plant and equipment to the periods in which the are used
NSF check – a check that is not paid by a bank because of insufficient funds in a bank
On January 1, 2018, Edward Corporation had 10,000 shares of $6 par value common stock and 10,000 shares of 8%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 3-for-1 conversion privilege. On October 1, 2018, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, 2018?
The accounting equation can be expressed as – Assets – Liabilities = Owners Equity
Post-Closing Trial Balance – A trial balance prepared after the closing entries are posted
stock – shares into which the owners' equity of a corporation is divided.
Financing activities – activities that obtain from investors and creditors that cash needed to launch and sustain the business; a section of a statement of cash flows.
A merchandiser using a perpetual system will require one additional adjusting entry to make the records agree with the actual inventory on hand.
A. True
B. False – TRUE
Obsolescence – Condition in which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage
On Jаnuаry 1, 2018, Edwаrd Cоrpоratiоn had 10,000 shares of $6 par value common stock and 10,000 shares of 8%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 3-for-1 conversion privilege. On October 1, 2018, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, 2018?
Working Capital – The difference between the amounts of current assets and current liabilities
cash – money or any instrument that banks will accept

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