Accounting Chapter 9

current assets – assets company plans to turn into cash or use to generate revenue in the next fiscal year
This is true relative to the statement of cash flows – it reports the amount of cash spent for long term assets
understandability – information presented in a clear and concise fashion so that users can interpret it and comprehend its meaning
Equity – the difference between assets and liabilities
Sarbanes-Oxley Act – Created the Public Company Accounting Oversight Board, regulates analyst conflicts, imposes corporate governance requirements, enhances accounting and control disclosures, impacts insider transactions and executive loans, establishes new types of criminal conduct, and expands penalties for violations of federal securities laws. (p.9)
Accounts recievable 3800
Sales revenue 3800
COGS 2400
Merchandise Inventory 2400 – PW Audio sells $3,800 in stereo equipment to Sauk on 5/4 on credit. The cost of the goods sold is $2,400. how does the seller journalize this
accounting record – organiized summaries of a buisness's financial activities
assets and expenses – increase with a debit and decrease with a credit
There is an accounting requirement that the cost flow assumption be consistent with the physical movement of the goods.
A. True
B. False – FALSE
This histology image (the entire picture) is an organ.  What organ is it?
locksmith – One who makes or repairs locks.
transaction – anything a business does that is an exchange of something for something else

most often the exchange is giving or receiving cash either now or in the future

ex. provide services or goods to customers in exchange for chad

ex. purchase a delivery truck and pay cash for the truck

ex. pay an employee for work

ex. pay a utility company for electricity provided

ex. borrow money from the bank and agree to pay it back with interest

time value of money – indicates a relationship between time and money
Scott Company uses the allowance method of accounting for bad debts. During May, the company found out that one of its largest customers filed for bankruptcy. If Scott Company decides to rite off the customer's account, what effect will that decision have on Scott's Company net Income for the period. – There is no effect on net income
Footing – The totaling of a column of a journal or ledger is called
selling expenses – Expenses of promoting sales, such as displaying and advertising merchandise, making sales, and delivering goods to customers.
This histоlоgy imаge (the entire picture) is аn оrgаn.  What organ is it?
on account – when a business buys on credit.

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