Accounting 202 Chapter 10

PREPAID EXPENSES – ESPENSES PAID IN ADVANCE OF THEIR USE (ASSET)
Purpose of a business – Add value –> Make a profit
publicly held corp. – a corp. that allows anyone in the public to purchase their stock
product costs – a business incurs to buy, manufacture, and deliver a good or service to a customer
Liability – An amount owned by a business.
double-entry system – the method require both debit and credit for the transaction
The revenue recognition principle – …
Assets – Resources owned by a business.
financial statement – Financial reports that summarize the financial condition and operations of a business
Motives that are known and freely admitted are called _____.
Time Span for which a company reports its revenues and expenses? – Accounting Period
Overhead – oil used to lubricate the electric saws used to make the furniture
capital account – an account used to summarize the owners equity in a business
Definition of Budgeted Income Statement & Budgeting, Cash Budget – Budgeted Income Statement: An accounting report which predicts revenues earned and expenses incurred, and thus the expected net profit, for the budget period.
Budgeting: The process of predicting/estimating the financial consequences of future events.
Cash Budget: An accounting report which predicts future cash receipts and payments, determines the expected cash surplus or deficit, and thus estimates the bank balance at the end of the budget period.
sale on account – a sale for which cash will be received on a later date
Mоtives thаt аre knоwn аnd freely admitted are called _____.
Petty Cash – cash kept on hand
Control over Cash Payments – Procedures to protect cash payment abuse might include

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