Financial Accounting Ch 1 Dj

deferred expense – prepaid rent
prepaid insurance
prepaid office supplies
initially recorded as assets
Shareholders' Equity or Owners' Equity – Together common stock + retained earnings are called?
What are the three types of Inventory? – 1) Raw material inventory
2) Work- in process inventory
3) Finished- goods inventory
Which of the following expressions is incorrect?
A. Gross profit less Operating expenses equals Net income.
B. Sales less Cost of goods sold less Operating expenses equals Net income.
C. Net income plus Operating expenses equals Gross profit.
D. Operating expenses less Cost of goods sold equals Gross profit. – D
Current Liabilities – liabilities due within a short time, usually within a year
accepted practice – elfogadott gyakorlat
withdrawl – assets taken out of a business for the owners personal use
Long-term Liabilities – Notes payable
Bonds payable
net loss – excess of total expense over total revenue for the period
Withdrawls – Assets taken out of a business for the owners personal use
A company decides to rent space for a satellite office for a year.  They must pay a $2000 deposit and pay rent of 1200 per month.  The first months rent is due at the same time as the deposit upon move-in.  Which of the following is true of this cash flow assuming the deposit is returned at the end of the year?
The fundamental qualities of accounting information are: – a. Relevance – information that is capable of making a difference in a decision. Comprised of
1. Predictive value means that the information can help users form expectations about the future.
2. Confirmatory value means that the information validates or refutes expectations based on previous evaluations.
3. Materiality means that information is material if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information.

b. Faithful representation – numbers and descriptions match what really happened or existed. Comprised of
1. Completeness meaning all necessary information is provided.
2. Neutrality meaning the information is unbiased.
3. Free from error meaning the information is accurate.

ROFL – (ROE – ROA), remember ROE=ROA+ROFL; the effect of financial leverage on a company's ROE
Goodwill – = Purchase Price- FV of net asset acquired
What are three reasons a corporation should issue bonds instead of selling common stock? – Stockholders control remains the same, tax savings, higher common stockholders equity
Classifed B/s – In this class, we will be working with An algebraic equation,
A cоmpаny decides tо rent spаce fоr а satellite office for a year.  They must pay a $2000 deposit and pay rent of 1200 per month.  The first months rent is due at the same time as the deposit upon move-in.  Which of the following is true of this cash flow assuming the deposit is returned at the end of the year?
not-for-profit firm – has the goal of providing goods or services to its clients

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