Chapter One Accounting In Action

Conservatism Principle – when in doubt, use the accounting method that will least likely overstate revenues and assets
LT notes payable/ LT debt – amounts owed to banks and other financing companies that will be paid later than one year from now, the amount is the principle amount owed only and does not include interest
Transaction – A business activity that changes assets, liabilities, or owner's equity.
Net loss – Excess of expenses over revenues for a period. (p.23)
Sales Returns and Allowances. – A temporary owner's equity contra account used to record credit given to a customer for shortages or damaged goods.
Disclosure notes would not include – Data to adjust the financial statements so that they are not misleading.
withdrawal – assets taken from a business for the owners personal use
statement of cash flows – summary of cash receipts & cash payments for time period
Postdated Check. – A check dated subsequent to (following) its date of issuance.
Sole Proprietorship – business owned by one person
When substances move up their concentration gradient, consuming energy to cross a membrane it is called ________.
Trustee – Is an independent party appointed to represent the bondholder.
Time Period Principle – The time period principle requires that accounting takes place over specific time periods known as fiscal periods (of equal length)
Account number – The number assigned to an account.
Income statement – advertising expense wold be reflected on the
endorsement – an authorized signature that transfers ownership of the check
full disclosure principle – An accounting principle that requires that a business's financial statements provide information on all the significant facts that have a bearing on their interpretation
activity analysis – measures how efficiently a firm is utilizing its assets
When substаnces mоve up their cоncentrаtiоn grаdient, consuming energy to cross a membrane it is called ________.
Adjusted Trial Balance – A list of accounts and their balances after the company has made all adjustments.
Acid Test Ratio: reflects the liquidity of a company. – a.
Expense – A decrease in owners equity resulting from a business transaction is an
t-account – a ledger account – is a tool used to understand the effects of one or more transaction

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