Accounting I: Financial Accounting Ch 2

account balance – the difference between the increases and decreases in an account
proprietorship – a business owned by one individual
Generally Accepted Accounting Principles – generally accepted by accountants and financial service professionals that the guidance provides an accurate understanding of the operating results and the financial position of a company. GAAP
Assets – ~ Past transaction
~ Present control
~ Future economic benefit
Cost of goods sold – Above gross margin in income statement
prepaid expenses – expenses paid in cash before they are used or consumed
The sales for July, August and September are $11,900, $10,800 and $19,100, respectively. For any particular month of sales, the following percentages are received over time in cash: 22% in cash from that same month of sales; 48% in cash from the previous month's sales; and, 33% in cash from the sales from two months ago. What amount of cash will be received during September?
Going concern – It is assumed that the business will continue to operate into the FORESEEABLE FUTURE
Certified Public Accountant (CPA) – An independent accountant who provides accounting services to the public for a fee.
Google, an internet search firm, would be classified as:
a. a manufacturing-sector company
b. a merchandising-sector company
c. a service sector company
d. None of these answers are correct. – c. a service sector company
assets to equity ratio (financial leverage ratio) – total assets / total stockholder's equity
net loss – difference between total revenue and expenses when total expenses is greater
Cash Equivalent – Is a short-term, highly liquid investment with an original maturity of less than three months.
The sаles fоr July, August аnd September аre $11,900, $10,800 and $19,100, respectively. Fоr any particular mоnth of sales, the following percentages are received over time in cash: 22% in cash from that same month of sales; 48% in cash from the previous month's sales; and, 33% in cash from the sales from two months ago. What amount of cash will be received during September?
dividends payout ratio – cash dividends declared on common stock / net income
Creditor – a business or individual to whom a debt is owed.
Committed Cost – Management does not have an option; Investments in facilities and equipment used in day to day operations are committed costs. These costs must be incurred or the company cannot operate. Long term in nature

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