Financial Accounting Ch 6

ATM – a computer terminal outside a bank or a different location
FASB – oversees the creation and governance of the accounting standards
Sales Invoice – An invoice used as a source document for recording a sale on account
expense – an outflow of assets resulting from the sale of goods and services
Overhead – factory supervisor's salary
Conservatism – The practice of using the least optimistic estimate when two estimates of amounts are about equally likely
postdated check – a check dated subsequent to (following) its date of issuance. Which will become expenses when consumed or expired
False – When a company pays insurance premiums in advance to an insurer it records the payment as a liability because the insurer owes future coverage
Going concern assumption – Assumes the entity will continue indefinitely
Liquidity Ratios – Measure the ability of a company to pay obligations expected to become due within next year or operating cycle
Which of the following components of a reflex arc would a muscle or gland most likely serve as?
What is meant by comparability when discussing financial accounting information? – Information that is measured and reported in a similar fashion across companies
Net Present Value – The Net Present Value is the amount over or under the required rate of return over the investment period. Net present value is NOT the amount eared or lost on the investment
Which оf the fоllоwing components of а reflex аrc would а muscle or gland most likely serve as?
corporation – shareholders own business w stock; shareholders only lose money invested in stock, limited liability, double taxation (corporation income tax and shareholder dividend stock)
shareholder/stockholders – owner of the corporation
Auditor independence – Auditor must be independent of the client for whom the audit is conducted
Just in Time – almost no inventory, materials are received to go into production, parts arrive at work stations to be assembled, products completed to be shipped
double declining balance Method – straight line rate= 100%+ useful life. double declining rate= 2 x straight line rate. depreciation expense= double declining balance rate x beginning period book value

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