Financial Accounting Ch 5

cash is on what account – balance sheet
asset
Journal – a from used to record transactions in chronological order
FAIR VALUE PRINCIPLE – assets and liabilities should be reported at fair value (includes marketable securities held by a company)
An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction? – D. Credit a different asset account for $500
IAS2 Inventories – * Requires inventories are valued at the lower of cost and net realisable value
* COST – purchase price + any costs incurred to bring product to where it is
* NRV – estimated selling price – costs necessary to bring product into a selling condition
leases – valuing assets and obligations to be capitalized under long-term leases and measuring the amount of the lease payments and annual leasehold amortization
Withdrawals – when the owner takes cash or other assets from the business for personal use.
3.  During the Renaissance the theatre turned to Aristotle for laws regarding dramatic structure. Scholars came up with three unbreakable rules, which they called the Unities—a form of “classical correctness.” Which of the following is not one of the unities?
Capital – The account used to summarize all the information pertaining to a single item in the accounting equation.
Earnings per Share Formula – (Net Income (-) Preference Dividends) / Weighted Average of Ordinary Shares Outstanding = Earnings per Share

Example: ($350,000 – 50,000) / 100,000 = $ 3 Earnings per Share

Which of the following statements is true about business plans?
a.
A company should create or revise its business plan on a regular basis.
b.
A company's business plan should be at least 200 pages long.
c.
A business plan is only necessary when a company is applying for a loan.
d.
A company should have a business plan only when it is starting up.
e.
A business plan should be a broad summary of the major aspects of the company. – a.
A company should create or revise its business plan on a regular basis.
Personal property – All property not classified as real property
closing entries – transfer the balances of all temporary accounts to the balance of the retained earning account.
Income Statement – a financial statement showing the revenue and expenses for a fiscal period.
3.  During the Renаissаnce the theаtre turned tо Aristоtle fоr laws regarding dramatic structure. Scholars came up with three unbreakable rules, which they called the Unities—a form of “classical correctness.” Which of the following is not one of the unities?
Gross profit method of estimating inventory – Estimating inventory by using the previous year's percentage of gross profit on operations

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