Financial Accounting: Ch 3 Adjusting The Accounts

Which of the following questions CANNOT be answered with CVP analysis?
a. If the company raises the selling price of its products and its costs remain the same, how many products must it sell to break even?
b. If the company's costs and selling prices don't change, how may products must the company sell to earn a desired profit?
c. At what selling price will customer demand for the company's products decrease?
d. Assuming that the company is currently earning a profit, if the company's costs and selling prices don't change, how much can the volume of sales decrease before the company stops earning a profit? – c. At what selling price will customer demand for the company's products decrease?
Historical Cost Principle – Fair value changes are not recognized in the accounting records
Retained earnings – Profits that are retained in the business
Comparable information – used in comparison across years and companies
physical inventory – actual count of what is on hand – daily, weekly, monthly
What is the residual value of an asset? – The residual value of an asset is the value the asset can be sold for at the end of it's useful life.
Trial balance – A list of ledger account balances, total debits must equal to total credit.
Cash Receipts Journal – A special journal used to record only cash receipt transactions.
audit – an official inspection of an individual's or organization's accounts, typically by an independent body
[22] The following is a summarized income statement of Carr Co.’s profit center No. 43 for the month just ended: Contribution margin   $70,000 Period expenses:     Manager’s salary $20,000 Facility depreciation 8,000 Corporate expense allocation 5,000 (33,000) Profit center income   $37,000 Which of the following amounts would most likely be subject to the control of the profit center’s manager? A. $70,000 B. $50,000   C. $37,000 D. $33,000
Revenue – an increase in owners equity resulting from the operation of a business
Expanded Accounting Equations – Stockholders Equity (Beginning) + Additional Investments – Dividends + Revenue – Expenses = Stockholders Equity (End)
resource drivers – factors that measure the consumption of resources
by activities.
Income Statement – Shows the incomes, expenses and profit for the period. It measures how well the business has performed.
Going Concern Assumption – The assumption that the company will continue in operation for the foreseeable future
[22] The fоllоwing is а summаrized incоme stаtement of Carr Co.’s profit center No. 43 for the month just ended: Contribution margin   $70,000 Period expenses:     Manager’s salary $20,000 Facility depreciation 8,000 Corporate expense allocation 5,000 (33,000) Profit center income   $37,000 Which of the following amounts would most likely be subject to the control of the profit center’s manager? A. $70,000 B. $50,000   C. $37,000 D. $33,000
accounts payable – promises to pay for goods/services bought on credit
contributed capital – Refers to the amount that stockholders invest in the company–included under the title common stock

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