Chapter 4 Double Entry Accounting

Balance sheet – presents assets, liabilities and owner's equity at a specific date. A balance sheet is also called Statement of Financial Position.
Going Concern Assumption – The belief that the business will continue operating for the foreseeable future, or an indefinite time. This concept justifies, for example, recording revenue before it is collected and expenses before they are paid.
Retained Earnings – Stockholders equity created from busniess operations through revenue and expense transactions
An account consists of: – C. A title, a debit side, and a credit side
accounting policies – explanations of the valuation methods used or the basic assumptions made concerning inventory valuations, depreciation methods, investments in subsidiaries
Expense – A decrease in resources resulting from the sale of goods or provision of services
Trailhound Company operates on a contribution margin of 30% and currently has fixed costs of $200,000. Next year, sales are projected to be $1,000,000. An advertising campaign is being evaluated that costs an additional $30,000. How much would sales have to increase to justify the additional expenditure?
a. $60,000
b. $90,000
c. $100,000
d. $300,000 – c. $100,000
$30,000 / .3 = $100,000
Common Stock – 1. Owners Equity
2. Balance Sheet
3. Credit
4. Permanent
non-current liabilities – debts which will not have to be paid back in the next year
Investing Activities – Long-term assets: Plant assets, natural resources, intangibles
Vocabulary–question 6 Reminder about instructions: supply the appropriate word to logically complete the sentence below. Important hints: You should fill in only one word for each blank, and no words will be repeated. Do not use articles of any kind in your answers (ie, no “el”, “la”, “los”, “las”; or “un”, “una”, “unos”, “unas” should appear in any answer in this section) If you give an answer that uses any word/s not found in chapter vocabulary, you will receive no credit for it. Special letters, should you need them: á    é   í    ó   ú   ñ A mi prima Mariela le encantan las hamburguesas con [l1] fritas.
Expenses – do not appear on balance sheet
salaries payable – current liabilities
Cancelled check – a check which has been paid by the bank and returned to the drawer for recordkeeping.
The account Unearned Revenue is a(n):
A) Liability
B) Revenue
C) Expense
D) Asset – A) Liability
Variable Cost – total cost varies in direct proportion to volume (activity level)
Accrual Accounting – Records rev and related expenses in the same accounting period that it provides the g/s, regardless if it receives or pays cash in that time period.
Vоcаbulаry–questiоn 6 Reminder аbоut instructions: supply the appropriate word to logically complete the sentence below. Important hints: You should fill in only one word for each blank, and no words will be repeated. Do not use articles of any kind in your answers (ie, no “el”, “la”, “los”, “las”; or “un”, “una”, “unos”, “unas” should appear in any answer in this section) If you give an answer that uses any word/s not found in chapter vocabulary, you will receive no credit for it. Special letters, should you need them: á    é   í    ó   ú   ñ A mi prima Mariela le encantan las hamburguesas con [l1] fritas.
The recording process steps : – 1. Analyze each transaction
2. Transfer the info to the appropriate accounts in the LEDGER

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