Accounting Chapter 1 Vocabulary

accounting system – a planned process for providing accounting information that will be useful to management.
Mortgage payable – A written promise that pledges real property as security for the payment of a debt
Financial Accounting – provides information for decision makers outside the entity
accounting equation – The accounting equation consist of three basic accounting elements (assets=liabilities+owners equity)
Plan Assets – A long-term asset category that includes property, plant, and equipment.
Proprietary, trust, and agency funds use the accrual or modified accrual basis of accounting (pick one) and show revenues when (pick two:) earned, available, measurable, received – accrual
earned and received
average number of days to collect accounts receivable – 365/accounts receivable turnover ratio
Davidson Electronics has the following:

Units/Unit Cost
Inventory, Jan. 1
Purchase, April 2
Purchase, Aug. 28

If Davidson has 7,000 units on hand at December 31, the cost of ending inventory under the average-cost method is:
A. $84,000.
B. $70,000.
C. $56,000.
D. $75,250. – D

retained earnings – the accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends
Explain First Normal Form (1NF), Second Normal Form (2NF) and Third Normal Form (3NF).
The net profit percentage will fall if – Gross profit percentage falls and or expense percentages rise
to run a company – управлять компанией
what does the SEC have the authority to do – has legal authority to establish and set GAAP for companies that issue stock to the public
Employer owes taxes to the government – Liabilities
Increased – An entry on the credit side of a revenue account indicates the account has been
Assets, Liabilities, and Stockholders' Equity – accounts are PERMANENT accounts – The year end balance becomes next year's beginning balance.
Explаin First Nоrmаl Fоrm (1NF), Secоnd Normаl Form (2NF) and Third Normal Form (3NF).
in a common-size balance sheet, we always set ____________ and ________________________ equal to 100% – total assets; total liabilities and owners equity
When recording depreciation does the depreciated equipment go on the debit or credit side? – Credit
failure activities – activities performed by an organization or its
customers in response to poor quality (poor quality does exist).
Earnings Per Share – the amount of net income available to common stockholders per share of common stock outstanding
Audit Report – a report from a clearinghouse that lists errors to be corrected before a claim can be submitted to the payer

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