Accounting Chapter 2

Monetary Unit Assumption – The assumption that requires items on the financial statements to be measured in terms of monetary unit
Paid salaries to employees for work done this year. Does this affect net income – Decreases net Income
common stock – -shows the amount of the owners' investment in a corporation
-increases owners' equity
-increases assets (cash)
-when owners invest assets in a business, they receive shares of common stock in return
operating activities – activities that create revenue or expense in the statement of cash flows. These activities affect the income statement.
Periodic inventory system – An inventory system under which the company does not keep detailed inventory records throughout the accounting period but determines the cost of goods sold only at the end of an accounting period.
accrual-basis accounting – accounting basis in which companies record, in the periods in which the events occur, transactions that change a company's financial statements, even if cash was not exchanged
Petty cash – An amount of cash kept on hand and used for making small payments
In the segment called “Close of the 1960s,” Steven Stills talked with great passion about what the counter culture movement got right and what it got wrong. Which of these did Stills say the movement got wrong?
outstanding checks – written checks that have not yet been paid by the bank
Property and Equipment – Physical assets the company uses in its operations for more than a year
-land
-building
-equipment
Transactions – An "economic event" which affects the business
What does it mean to recognize revenue – Record so that it appears on the income statement
In the segment cаlled “Clоse оf the 1960s,” Steven Stills tаlked with greаt passiоn about what the counter culture movement got right and what it got wrong. Which of these did Stills say the movement got wrong?
income tax – short section reporting federal and state taxes levied on income from continuing operations
Gross Profit – Sales Revenue – COGS
articles of incorporation – describes the nature of the firms business activities, the shares to be issued, and the composition of the inital board of directors
Calendar Year – An accounting period that extends from January 1 to December 31.
A form on which a brief message is written describing a transaction – memorandum

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