Fundamental Accounting Principles

Current portion of long term debt – Debt that will be paid within the next year
loss – Outflow from adjunct activities, decrease to retained earnings.
Fifo – First in first out: Is just an assignment method

Assumes that the oldest item is sold first

Business Ethics – The principles of right and wrong that guide an individual in making business decisions.
Detective controls – Find problems
Relevance – The degree that accounting information bears on the decision process, primarily by providing timely feedback on an enterprise's financial condition and performance.
The use of pre-numbered checks in disbursing cash is an application of the principle of
A. establishment of responsibility.
B. segregation of duties.
C. physical controls.
D. documentation procedures. – D
Recognize Revenue – Recognizing revenue simply means to record the revenue in the accounting records (ie. on the income statement)
Inventory – computation of current ratio includes
A CPA, while performing an audit, strives to achieve independence in appearance in order to
CLOSING THE ACCOUNTS – STEP IN THE ACCOUNTING CYCLE AT THE END OF THE PERIOD. CLOSING THE ACCOUNTS CONSISTS OF JOURNALIZING AND POSTING THE CLOSING ENTRIES TO SET THE BALANCES OF THE REVENUE, EXPENSE AND DIVIDEND ACCOUNTS TO ZERO FOR THE NEXT PERIOD.
A company whose goal is zero defects would usually treat all spoilage as abnormal. – True
Cash Budgets – Cash Budgets are accounting reports which predicts future cash receipts and payments, determines the expected cash surplus or deficit and thus estimates the bank balance at the end of the budget. "Statement of Receipts and Payments"
What's in the Expected Cash Receipts
– Cash Received
– Interest From Investment
– Cash Fees/Takings
– Capital Contribution
– GST Received
– Loan Received
– GST Refund
– Debtors Receipts
What's in the Expected Cash Payments
– Expense Paid
– GST Paid
– GST Settlement
– Cash Drawings
– Loan Repayment
– Cash Paid for Non-Current Asset
– Payments to Creditors
A CPA, while perfоrming аn аudit, strives tо аchieve independence in appearance in оrder to
Reasons for Unfavorable DM variance – -Inefficient
-Price of DM purchased is too high
-unrealistic standard of DM cost/unit
Expense, Income Statement, Debit, Temporary – Rent Expense

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