Financial Accounting

Operating Cycle – The time it takes to purchase goods or services from suppliers, sell goods or services to customers, and collect cash from customers.
Closing Entries – journal entries used to prepare temporary accounts for a new fiscal period
capital (net worth; owner's equity; proprietorship) – the amount by which the total assets exceed the total liabilities of a business; an owner's financial interest in a business
Activity Ratios – reflect management's use of assets
Normal side balance Salaries Expense – Dr
When a company has a net negative balance in its bank account, it is
A. not reported on its financial statements.
B. reported as a negative current asset.
C. reported as a current liability.
D. reported as an operating expense on the income statement. – C
g. – Shrinkage: the difference between a physical count and recorded quantities
Non Current Liabilities – Long term liabilities, e.g. mortgage, long term loan.
The dark patches on the lunar surface that make the image of the “man in the moon” are
Profit margin – Ratio of a company's net income to its net sales; the percent of income in each dollar of revenue; also called net profit margin
Accrual-basis accounting – Follows the GAAP, recognizes revenues and expenses in the PERIOD IN WHICH THE EVEN OCCUR RATHER THEN RECEIVED OR PAYD IN CASH
A decrease in owners equity resulting from a business transaction is a/an – Expense
The dаrk pаtches оn the lunаr surface that make the image оf the “man in the mоon” are
The business entity assumption – iv.
The FASB's conceptual framework is developed in a series of concept statements (collectively the Conceptual Framework). The conceptual framework has the following 3 levels: – a. First level: The objective of financial reporting, the "why" or purpose of accounting.
b. Second level: The qualitative characteristics and the elements, which form a bridge between the 1st and 3rd levels.
c. Third level: Recognition, measurement, and disclosure concepts, the "how" or implementation.

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