Accounting Chapter 1 Vocabulary

FOB shipping point – Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
FORMULA FOR CALCULATING (Owners equity balance) OR (Ending Capital Account Balance) – Ending Owner's Equity = Beginning Owner's Equity + Owners Contributions + Net income (loss) – Owner's Withdrawls
Sales journals(S) – used to records sales made on credit not cash
What is the purpose of internal controls? – The purpose of internal controls is to provide reasonable assurance regarding the effectiveness and efficiency of operations, reliability of financial reports and compliance with applicable laws and regulations.
journal – a form for recordeing transaction in chronological order
Simple Rate of Return Formula – (Annual Net Cash Flows – Annual Depreciation**) / Initial Investment = Simple Rate of Return %

** Cost – Residual Value / Useful Life

Current Asset – (Short-Term Asset)
an asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year
appears on the side of an account-debit or credit-where we record inc – normal balance
Which of the following is NOT considered an essential nutrient?
service revenue – sales of services for cash or on credit
What is a asset? – An asset is a resource controlled by the entity from which economic benefits are expected.
Accelerated depreciation method – Method that produces large depreciation charges in the early years of an asset's life and smaller charges in its later years.
Balance Sheet – A snapshot of a business's finances at a fixed point in time
Which оf the fоllоwing is NOT considered аn essentiаl nutrient?
Dual Effect of Transactions – When on account changes, another account must change to keep equation in balance
Purchase journal (P) – records only purchases we have made on Credit from a supplier..No cash purchases
Markup – Amount added to cost of merchandise to determine the selling price

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