Chapter 1 Introduction To Accounting And Business (accounting Terms)

The multiple-step income statement for a merchandising company shows each of the following items except
A. Gross profit.
B. Cost of goods sold.
C. Sales revenue section.
D. Investing activities section. – D
bonds payable – long term amounts owed to investors
Expenses – Outflows or using up of assets as part of operations of a business to generate sales. (p.23)
what are the 3 guidelines for ethical decisions – identify ethical concerns
analyze options
make ethical decisions
time period assumption – Assumption that an organization's activities can be divided into specific time periods such as months, quarters, or years
Partnership – A business run by 2-20 people with a common view to profit
What does the liquid ratio associate with – The amount of time it takes for a current asset to turn into cash
Sole Proprietorship – business is not separate from the owner
When handling an ethical dilemma, managers should select the option that will most likely:
accrued revenues – unrecorded revenues that have been earned & for which cash has yet to be received
Current liabilities – Obligations that a company expects to pay within the coming year.
Cash flows – Cash receipts and cash payments only CASH
shareholders – owners of a corporation. not personally liable for corporate acts or debts also know as stockholders
When hаndling аn ethicаl dilemma, managers shоuld select the оptiоn that will most likely:
When can a cost be reported on the balance sheet as an asset? – A cost can only be reported on the balance sheet as an "asset" (something the company has) if there is "probably future economic benefit"

When the asset is used or converted to cash the asset becomes an "expense" because there is no longer probable future economic benefit

Compensation Record – See individuals earnings record. (An employee record that contains information needed to compute earnings and complete tax reports.)
The accounting process – Identification recording communication

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