Financial Accounting Chapter 1

The three steps in the transaction analysis process – 1. Identify the accounts affected and classify them by type of account.
2. Determine the direction of the effect on each account.
3. Verify that the accounting equation remains in balance.
Audit – systematic examination of a company's accounting system to determine whether its financial reports fairly represent its operations
5.Material weakness – is a significant deficiency in internal controls that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
property, plant and equipment – one of the common groups on the classified balance sheet

physical assets expected to be sued for more than one year

Accounting equation – Assets=Liabilities+Owner's Equity is the
Interest Payable – Liabilities
Which of the following is a characteristic of red bone marrow?
Operating Margin – Operating Income / Net Sales

Amount of $ from sales per dollar after recovering expenses

The inventory turnover ratio is computed by dividing cost of goods sold by
A. beginning inventory.
B. ending inventory.
C. average inventory.
D. 365 days. – C
Check stub – a form on which information is recorded by the drawer of a check concerning the check drawn; a source document.
NSF check – a check that is not paid by a bank because of insufficient funds in a bank
debit – Received Cash from owner as an investment we _____ cash and credit owner capital
Financial Accounting – provides information for decision makers outside the entity
Which оf the fоllоwing is а chаrаcteristic of red bone marrow?
Retained earnings – An equity: Sum of all profits earned by the business not distributed to investors as dividends.
Going concern – The business is assumed to last into a forseeable future
Current Liabilities – debts that are due within one year are

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