Horngren’s Accounting Chapter 2 Vocabulary

Common-sized income statement – each account is expressed as a percentage of the value of sales
income statement
Statement of Earnings or
Statement of Operations) – 1st financial statement prepared
R-E=net income
EXPRIED COSTS reduce owners equity
the profitability of the firm over a period of time
t account – a skeleton verson of a stadard account used for demonstrating purposes
Engineering approach – A detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs (p35)
Income – An inflow or enhancement of economic befits that increases assets or reduces liabilities – comprises or revenue and gains
Time Period Assumption – Indicates that the long life of a company can be reported in shorter time periods.
How much money would have to be invested, compounded monthly, with 8% interest for 9 years to earn $1000, rounded to the nearest dollar?
sole proprietorship – work alone
Goodwill – Amount by which a company's (or segment's) value exceeds the value of its individual assets less its liabilities.
Hоw much mоney wоuld hаve to be invested, compounded monthly, with 8% interest for 9 yeаrs to eаrn $1000, rounded to the nearest dollar?
Specific identification – Concentrates of physically linking a product to a particular item with the cogs. Only practical for small numbers of items, ex. cars

But bar codes and scanning equipment are becoming popular for specific identification method

cumulative – shares receive priority for future dividends if dividends are not paid in a given year

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