Accounting Chapter 5

What applies to accounting – -Organizing
-Maintaining
-Recording
-Analyze financial activity
9. – Know how to calculate cost of goods sold (COGS aka Cost of Sales, Cost of Revenues) and gross profit using various mathematical approaches: Sales – Gross Profit = COGS
Adjusting entries – These transactions adjust the account balances before the final financial statements are prepared and typically affect one balance sheet account and one income statement account such as inventory and COGS.
Owner's Equity – Amount remaining after the value of all liabilities is subtracted from the value of all assets
Bonds Investments, Readily Marketable, Almost as liquid as cash, Capital stock investments, Current Assets – Short-Term Marketable Securities
Write-Off Journal Entry: Allowance for doubtful accounts (debit) – Accounts receivable (credit) *did not affect any income statement accounts or total assets
Accounting – Is the process of identifying measuring, recording and communicating economic information to assist users to make decisions
Which of the following is reinforced by the visual symbolism of a message?
Intangible assets – goodwill, patents, trademarks, copyrights, franchises
Permanent Accounts – Because their balances carry forward their balance sheet accounts
Which оf the fоllоwing is reinforced by the visuаl symbolism of а messаge?
Selling Expenses/Distribution Costs – Expenses related to the selling of the goods/inventory, e.g. advertising, delivery expenses, travelling expenses.
Return on Total Assets – (Net Income + Interest Expense) / Avg. Total Assets

Profit generated by each $ of tot. assets

Restrictive Endorsement – an endorsement restricting further transfer of a check's ownership
Number of units produced > units sold – Absorption costing = Higher NI

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