Chapter 01 Fundamental Accounting Principles

Which of the following statements is true about companies in the United States?
a. Corporations earn more combined revenue than companies with any other form of business organization
b. More partnerships exist than any other form of business organization
c. Sole proprietorships and partnerships combined earn more revenues than corporations
d. More sole corporations exist than any other form of business organization – a. Corporations earn more combined revenue than companies with any other form of business organization
The Period Assumption – Business activities will be reported over specific periods: one-year called the fiscal year and four interim periods, or quarters of a year. A company's FY can start on the 1st day of any month and end on the 31st day the twelfth month later.
Free Cash Flow – Cash from operations – Capital Expenditures
liabilities – the rights of creditors that represent debts of the business
GAAP – Generally Accepted Accounting Principals
Accounts payable ledger originates from: – purchase journal
cash payments journal
general journal
Transaction – A business activity that changes assets, liabilities, or owner's equity
Any linear cost function can be graphed by knowing only the slope coefficient. – False
Currently, how many people live in the North American Region?
Net Present Value Method – used to compare the present value of cash inflows to the present value of cash outflows at a given required rate of return. Establishing a present value for all cash flows allows a comparison of cash in and cash out in equivalent dollars.
Comprehensive Income – change in equity
The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the
A. direct write-off method.
B. percentage of receivables basis.
C. percentage of sales basis.
D. percentage of receivables and percentage of sales basis. – B
asset – anything of value that is owed
*unit of measure concept* – A concept of accounting requiring that economic data be recorded in dollars.
sale on account: – a sale for which cash will be received at a later date
Currently, hоw mаny peоple live in the Nоrth Americаn Region?
What is Understandability? – Reports must be readily understandable by users.
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
Callable – A bond feature that allows the borrower to repay the bonds before their scheduled maturity date.
Convertible – A bond feature that allows the lender to convert each bond into a specified number of shares a common stock.
How are general ledger account titles listen on a trial balance? – Same order as in the chart of accounts

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