Fundamental Accounting Principles

Long Term Liabilities – probably future sacrifices of economic benefits arising from present obligations that are not payable within a year or the operating cycle of the company, whichever is longer
14. The operating cycle of a company is the
1. time it takes to use cash to develop a product or service and get it ready to sell
2. time it takes to use cash to develop a product or service, sell it, and collect from the customers
3. time it takes to develop a product or service and to sell it
4. period of time represented on the income statement and cash flow statement – 2. time it takes to use cash to develop a product or service, sell it, and collect from the customers
Budgets should be prepared in the following sequence: – 1. Sales Budget 2. Production Budget 3. DM Budget 4. Cash Budget
in order of importance – in der Reihenfolge ihrer Wichtigkeit
Certified Public Accountant (CPA) – Designation by the American Institute of Certified Public Accountants for those who pass an exam and meet work-experience requirements
Personal net worth – The difference between personal assets and personal liabilities
SEC – Securities and Exchange Commission, created by Congress to regulate capital transactions. Has legal authority.
CD-ROMs and DVDs are examples of _____.
Net Loss – When expenses exceed revenue
Net purchases – purchases minus purchases returns and allowances minus purchase discounts.
Drawee – a person or concern, usually a bank, that has been ordered to make payment on a check or draft is called the
What is the Time period assumption? – An assumption that the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared for the business.
Income statement – Financial report listing income, expenses and net profit or loss for a period
owner's equity – the amount remianing after the value of all liabilities is subtracted from the value of all assets
CD-ROMs аnd DVDs аre exаmples оf _____.
Allowances – C of business income
In a perpetual inventory system, the Cost of Goods Sold account is used
A. only when a cash sale of merchandise occurs.
B. only when a credit sale of merchandise occurs.
C. only when a sale of merchandise occurs.
D. whenever there is a sale of merchandise or a return of merchandise sold. – D
If the selling price per unit of a product is $30, variable costs per unit are $20, and total fixed costs are $10,000 and a company sells 5,000 units, operating income would be $40,000. – True

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