Fundamental Accounting Principles

Credit – The right side of a standard account
temporary accounts (normal accounts) are?
Include? – accumulate data related to one accounting period
1) income statement accounts
2) dividends account
3) income summary
closing process applies to only these account
salary – generally considered to be compensation for managerial or administrative services expressed in terms of a month or year
CLOSING THE ACCOUNTS – STEP IN THE ACCOUNTING CYCLE AT THE END OF THE PERIOD. CLOSING THE ACCOUNTS CONSISTS OF JOURNALIZING AND POSTING THE CLOSING ENTRIES TO SET THE BALANCES OF THE REVENUE, EXPENSE AND DIVIDEND ACCOUNTS TO ZERO FOR THE NEXT PERIOD.
Trial Balance – a work paper proving the equality of the debit and credit balances in the ledger.
The age of account receivable tells you: – The number of days on average it takes debtors to pay their accounts. Eg. An age of accounts receivable of 42 days means on average it takes debtors 42 days to pay their accounts – this is over a month so if you offer monthly credit terms you might become concerned with this average as some debtors will be taking longer than 42 days considering some will pay within the 30 day monthly credit terms.
unearned revenue – liability created by receiving cash in advance of providing the service
The proper spelling for a gland that produces oil is ___________.
profitability ratios – measures of the degree of success or failure of a given company or division for a given period of time
Long-Lived Assets – Are tangible and intangible resources owned by a business and used in its operations over several years.
Comparable information – used in comparison across years and companies
debt to total assets ratio – total liabilities/ total assets
tests of profitability – operating profit margin is from _
Account tile – The name given to an account is called account tile
Revenue recognition principle – record revenue only after you have earned it
The prоper spelling fоr а glаnd thаt prоduces oil is ___________.
Liabilities – Amounts owed to other people (creditors) or institutions (banks). Future sacrifices of economics benefits (cash) that the business is currently obliged to make as a result of a past transaction, e.g. loans.

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