Accounting Chapter 5

Goodwill – Occurs when one company buys another company
permanent accounts are – not closed
uncollectible account – written-off (the asset is moved) and an expense is recognized
Issuance of Stock Effects – Increase assets
no effect on liabilities
increase stockholders' equity
Two major functions of accounting – …
Operating profit – The profit that a company generates when considering both the cost of the inventory and the normal expenses incurred to operate the business
amortization expense – operating expense, IS, debit
Sales/Collections Process – sell and deliver goods and/or services to customers and to collect payment
Three components of a balance sheet – assets, liabilities, equity
Job cost sheets are used to track all of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.
Generally accepted accounting principles – Guidelines that must be followed while accounting
Under the accrual basis of accounting, expenses are reported in the accounting period when the – Expenses matches the revenues or is used up
Jоb cоst sheets аre used tо trаck аll of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.
General Journal – Journal with two amount columns in which all kinds of entries can be recorded
Promotion – Info, persuading, and reminding customers about a product service

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