Accounting Chapter One Vocab

Which of the following budgets would NOT be useful in preparing a company's projected income statement?
a. Sales budget
b. Cash budget
c. Selling expenses budget
d. General and administrative expenses budget. – b. Cash budget
Statement of Cash flows – identifies cash inflows(receipts) and cash outflows (payments) over a period of time.
Cost Principle – record and report assets at cost to acquire until disposal
For best results, cost management emphasizes independently coordinating supply chain activities within your company and not interfering with other companies. – False
absentee ownership – owner does not personally manage business or is not in area of operations; investors across the world necessitate financial statements to inform them
Average accounts receivable – (Beginning accounts receivable + Ending accounts receivable) divided by 2.
The inability to get firms to change their culture by freezing, changing, and re-freezing is due to …
Profitability analysis – provides evidence concerning the earnings potential of a company and how effectively the firm is being managed.
Sales Allowance – Credit allowed a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the vendor's accounts receivable.
historical cost concept – requires that most assets be reported at the amount paid for them regardless of increases in market value
Sales Journal – A special journal used to record only sales of merchandise on account.
Check – A written order drawn by a depositor directing his bank to deduct money from his account and pay the person or company designated
Expense – The money that is spent to develop the product, sell it, account for it, and manage the whole production and selling process.
The inаbility tо get firms tо chаnge their culture by freezing, chаnging, and re-freezing is due tо …
CONSISTENCY – use of the same accounting principles and methods from year to year within a company. (Depreciation, Accruals, Inventory costs)
liability – something owed to another business entity
Revenue – Money earned by the business.
Liabilities – Amounts owed to other people (creditors) or institutions (banks). Future sacrifices of economics benefits (cash) that the business is currently obliged to make as a result of a past transaction, e.g. loans.
A chronological record (or history) of an entity's transactions is called a: – journal

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