Century 21 Accounting Chapter 3

operating cycle – The time it takes to buy / sell inventory (or provide service) and collect the cash
Lower-of-cost-or-market (LCM) Rule – must reduce overall Inventory balances if deemed to be lower than market value. If so, write down Ending Inventory to its "replacement cost" as follows:

Cost of Goods Sold [debit to an expense account on Income Statement]

Inventory [credit to write-down Asset Account on Balance Sheet]

Property Plant and Equipment – items used for more than one year to provide goods or services to customers with PHYSICAL SUBSTANCE ie land, buildings, manufacturing equipment, furniture, and fixtures, computers, and vehicles.
How to determine Free Cash Flow – Cash Provided by Operations
-Capital Expenditures
-Cash Dividends
=
Free Cash Flows
bank reconcilitation – matching bank statement with checks
book balance = bank balance
What is the residual value of an asset? – The residual value of an asset is the value the asset can be sold for at the end of it's useful life.
working captial – =current assets- current liablities
In the physician’s order for a “PA and lat chest radiograph,” the image will be taken from
Transactions – An "economic event" which affects the business
Accounting system – A planned process for providing financial information that will be useful to management
Liability – an amount owed by a business
Medicare Tax base – 1.5%, No tax base
Unearned Revenues – Cash received and recorded as liabilites before revenue is earned.
Performance Measures – Indicate whether managers are achieving their business goals and whether the business activities are well managed.
Expenses – Outflows/losses/consumptions of future economic benefits that result in decrease in assets or increase in liabilities and reduce owner's equity.
In the physiciаn’s оrder fоr а “PA аnd lat chest radiоgraph,” the image will be taken from
créditos por ventas – trade receivables
Deferred Expense – payment is made in advance for insurance or rent
Order of Liabilities in a Business – The liabilities that are payable within the shortest amount of time are listed first and the liabilities that are due more than one year in the future are listed last.
A formal report that shows what an individual owns, what an individual owes, and the difference between the two – Net worth statement

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