Financial Accounting Ch 6

84. The body of rules and procedures that guide the measurement and communication of financial accounting information is known as:
A. Standards of Professional Compliance (SPC).
B. Generally Accepted Accounting Principles (GAAP).
C. Generally Accepted Auditing Standards (GAAS).
D. Rules of Financial Reporting (RFR). – B. Generally Accepted Accounting Principles (GAAP).
How do you determine a assets depreciation cost? – Cost of Asset – Salvage Value
Public corporation – A separate legal entity in which ownership is available to the public at large
Aspects of a Balance Sheet – Assets=Liabilities + Stockholders' Equity
List assets in order of liquidity
List liabilities largest to smallest amount
Liquidity Ratios – "current"
receivables turnover ratio
average collection period
inventory turnover ratio
average days in inventory
current ratio
acid-test ratio
Dr. – the abbreviation for debit
The cost of capital is a weighted average of the cost of what 3 things – Common Stock
Preferred Stock
Debt
Restrictive Endorsement – restricts further transfer ownership
Accuracy plus speed of performance is called what in Precision Teaching?
Revenue – an increase in owners equity resulting from operation of a business
Direct Materials – woods used in manufacturing the furniture
The authoritative status of the Framework for the Preparation and Presentation of Financial Statements is as follows:

A. It has no authoritative status.

B. It is not as authoritative as a standard but takes precedence over any interpretation related to the reporting issue.

C. It takes precedence over all other authoritative literature.

D. It is used when there is no standard or interpretation related to the reporting issues under consideration. – D. It is used when there is no standard or interpretation related to the reporting issues under consideration.

. If a company plans to raise the selling price of its product, which of the following budget schedules would not be affected by this decision? (Assume that the price change will have no effect on the projected sales quantity.)
a. Cash budget
b. Projected income statement
c. Purchases budget
d. Sales budget
e. Projected balance sheet – c. Purchases budget
Expanded accounting equation – Assets= liabilities+capital-withdrawals+revenue-expense
Stated Value – Treated and Recorded the same as par value
Gain on plant assets – Revenue that results when a plant asset is sold for more than it's book value
Accurаcy plus speed оf perfоrmаnce is cаlled what in Precisiоn Teaching?
Capitalize – An expenditure accounted for as an asset rather than an expense
Which of the following is never a current liability account? – Prepaid Rent
Current Ratio – (Current Assets)/(Current Liabilities)
*Should be around 2 at least

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