Chapter One Accounting In Action

Normal Balance – The balance that appears on the increase side of an account.
events – Happenings that both affect an organization's financial position and can be reliably measured.
The Realization of Revenue accounting concept is applied when a sale is recorded at the time the sale is made. – True
Retained Earnings – the amount of earnings (profits) reinvested in the business (and thus not distributed to stockholders in the form of dividends)
Gains – These are similar to revenues; however, they result from incidental transactions (such as the buying and selling of a fixed asset) rather than from operating activities.
Bond Issuance (when bonds are sold)
If $20M bond, 1% discount, with 2% admin fee – DR Cash $19,400,000
DR Expenditure $400,000
DR Other Financing Use $200,000
CR Other Financing Source $20,000,000
stockholders' equity – owners' claim to assets
C/d and b/d meaning – Balance carried down, at beginning
Balance brought down, at end
Accrued revenues – Revenues that have been earned but not yet received, ex. Consulting service already performed but hasn't billed customer yet
Working capital – the excess of current assets over current liabilities is called
A box contains 26 blenders, 4 of which are defective. If 3 blenders are selected at random, find the probability that all are defective.
Periodic Inventory system – cost of goods sold is determined at the end of the fiscal period
Selling expenses – Коммерческие расходы
A bоx cоntаins 26 blenders, 4 оf which аre defective. If 3 blenders аre selected at random, find the probability that all are defective.
An Independent accountant who provides accounting services to the public for a free. – Certified Public Accountant [cpa]
Balance in allowance for doubtful accounts at end of year – Beginning Balance + Bad Debt Expense Estimate – Write-Offs = Ending Balance
Return on Assets – Net Income/ Average Total Assets

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