Accounting Chapter 4

Liabilities – Debts owed by a firm
Closing Updates – retained earnings
net income/dividends
Credit – Recorded on the right side; an entry that decreases asset and expense accounts, and increases liability, revenue, and most equity accounts; abbreviated CR
Explain how the segregation of duties serves as a major control for safeguarding cash – Requires that the person who has physical custody of the cash not be the same person who does the record keeping for cash
Accrued Income – Income earned during an accounting period but not yet received
Accrual – recorded when earned
going concern assumption – the entity will remain in operation for the foreseeable future
book value – the difference between an assets accounts balance and its related contra account balance.
A planned process designed to compile financial information and summarize the results in records and reports – Accounting system
Break Even – A point at which revenue equals expenses.
A decrease in production levels within a relevant range A. Decreases variable cost per unit. B. Increases variable cost per unit. C. Decreases total costs. D. Increases total fixed costs.
operating activities – the activities associated with the day to day operations of the business (provide goods or services to customers and associated costs)
Cash short – A petty cash on hand amount that is less than a recorded amount
Person whom money is owed – Creditor
Betterments – Expenditures to make a plant asset more efficient or productive.
Labor budget – Units produced xDLH x wage rate
Which of the following describes the contribution margin per unit?
a.
The amount of the company's selling price left over after recovering its fixed cost per unit
b.
The amount of the company's selling price available to help recover its fixed costs and then earn a profit
c.
The amount by which the company's net income will decrease if it sells one more unit of product than the breakeven volume
d.
The amount by which the company's variable cost per unit exceeds its selling price per unit of product
e.
All of the above describe the contribution margin per unit – b.
The amount of the company's selling price available to help recover its fixed costs and then earn a profit
A decreаse in prоductiоn levels within а relevаnt range A. Decreases variable cоst per unit. B. Increases variable cost per unit. C. Decreases total costs. D. Increases total fixed costs.
10 K – the annual form that publicly traded companies must file with the SEC
Income statement – describes a companies revenues and expenses along with the resulting net incomeor loss over a period of time due to earnings activities.

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