Accounting Chapter 4

ICLICKER Revenue recognition principle states that – B
Fiscal year – an accounting period of twelve month.
John Smith is employed as a local funeral home and is paid on an hourly rate of $5.00 per hour. He is also paid time and a half for any hours worked in excess of 40 hours per week. For the current pay period, he worked a total of 60 hours. If his FICA tax is 6%, and his withholding is 10%, what is his take-home pay for the week? – $294.00
Financial accounting – reports to evaluate how well the business has achieved its goals
accounting system – A planned process for providing financial information that will be useful to management
Accounts can be: – Permanent or temporary
Income statement or balance
Closed or not closed
Debit or credit
sales journal – A special journal used to record only sales of merchandise on account.
The asset cash is credited – when cash is spent in the acquisition of an asset the impact on the accounting equation is
[ 17 ] Which of the following decision-making models equates the initial investment with the present value of the future cash inflows?   A. Accounting rate of return.   B. Payback period.   C. Internal rate of return.   D. Cost-benefit ratio.
Current Liabilities – Liabilities which we expect to be paid within the coming accounting period. It will be necessary for us to have cash to meet these liabilities.
E.g. short term bank loan and accounts payable.
What level of creditworthiness does JC Penney have? – Junk bond
TEST!! NSF Check – On the company's side our accounts receivable goes up and cash goes down
journal – a form for recording transcations in chronological order
[ 17 ] Which оf the fоllоwing decision-mаking models equаtes the initiаl investment with the present value of the future cash inflows?   A. Accounting rate of return.   B. Payback period.   C. Internal rate of return.   D. Cost-benefit ratio.
withdrawals – Assets taken from, the business for the owners personal own
Book Keeper – Generally supervises the work of accounting clerks, helps with daily accounting work & summarizes accounting info
Term Bonds – Bonds that mature on the same date.
asset – item that is owned by a business and will provide future benefit

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