Financial Accounting: Ch 3 Adjusting The Accounts

Checks – a piece of commercial paper drawn on funds in a bank account and payable on demand.
Interest – An amount paid for the use of money for a period of time.
Return on Assets(ROA) – Net Income/Total Assets
Source document – Cash Receipts: Evidenced that a cash inflow has occurred.
Cheque butt: Evidence that a cash outflow has occurred.
Invoice: Evidenced that a credit transaction has occurred. (Either a credit sale or credit purchase.
Memo: Evidence of transaction between the business and owner or if there are no other documents available.
There are three types of footnotes: – 1) provides a description of the accounting rules followed

2) provides more details for the items listed on the financial statements

3) provides information on things not listed on the financial statements

treasurer – employee responsible for the management of a companys cash.
Land – can never be expensed due to IRS rules, value can never go down
#6. The purchase of inventory with cash: – has no net effect on total assets
How long does it take (in years) to triple your money if I =10%? Answer: ____ NOTE: You must strictly follow the input format below otherwise you will not earn credit. Wrong format = Wrong answer Answer Format: enter only the correct number for answer(s), nothing else (no %, no units …) Number Format: Use the most nearly integer number for the answer.  As the general rule, round down the number if it is less than .5, and round up if greater than or equal to .5 for example 7.5 = 8 for answer, 7.488 = 7 for answer. No comma is needed within the series of numbers, for example 8000 is acceptable format, 8,000 is unacceptable format (= wrong answer).
Notes to the Financial Statements – Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is needed.
Depreciation/Depletion/Amortization Methods – 1.) Straight-line—easiest to apply [Annual Depreciation Expense = (Asset Cost-Residual Value) / Estimated Useful Life] 2.) Units-of-Production—primarily used to Deplete natural resources
3.) Declining-Balance—apply factor to Net Book Value (NBV) of asset each period [Residual Value is not considered in calculation]
Losses – Decreases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result from expenses or distributions to owners.
managerial accounting – accounting used only by the business that you are creating it for, internal accounting system, not required by law
Tax Base – The maximum amount of earnings on which a tax is calculated.
credit – sold services on account: _______ sales
A company whose goal is zero defects would usually treat all spoilage as abnormal. – True
Hоw lоng dоes it tаke (in yeаrs) to triple your money if I =10%? Answer: ____ NOTE: You must strictly follow the input formаt below otherwise you will not earn credit. Wrong format = Wrong answer Answer Format: enter only the correct number for answer(s), nothing else (no %, no units …) Number Format: Use the most nearly integer number for the answer.  As the general rule, round down the number if it is less than .5, and round up if greater than or equal to .5 for example 7.5 = 8 for answer, 7.488 = 7 for answer. No comma is needed within the series of numbers, for example 8000 is acceptable format, 8,000 is unacceptable format (= wrong answer).
A journal provides – a chronological record of transactions
prepaid expenses – advanced payment of future expenses & recorded on assets when cash is paid
Assets – Property owned by a business.

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