Financial Accounting: Ch 3 Adjusting The Accounts

expense recognition (or matching) principle – aims to record expenses in the same accounting period as the revenues that are earned as results of those expenses
Which of the following is not a major challenge facing the accounting profession?

A. Accounting for hard assets.
B. Forward-looking information.
C. Nonfinancial measurements.
D.Timeliness. – A. Accounting for hard assets.

minimum living allowance – asgari geçim indirimi
Source documents – the original document showing that a transaction has occurred. Bill of sale, cheque, invoice, receipt, sales order
explanatory notes – kiegészítő melléklet
external transactions – transactions the firm conduct with a separate economic entity.
Accounting system – A planned process for providing financial information that will be useful to management.
examples of liabilities – -accounts payable
-wages owed to employees
-unearned anything
38.Audit Department – is a unit within a company that oversees recordkeeping and accounting functions.
Profit and Loss Statement – A summary of the results of operations for a specified period of time
Which of the following is NOT one of the factors that influences the supply of a product?
Current Dividend Preference – Is the feature of preferred stock that grants priority on preferred dividends over common dividends.
owner's equity – the amount remaining after the value of all liability's is subtracted from the value of all assets
"Quick Ratio" Classify, Calculate, and Interpret – Liquidity Ratio

Quick Ratio = [ cash + Marketable Securities + Receivables / Current Liabilities ]

Does not include inventories and other assets that might not be very liquid. HIGH: able to pay back short-term bills. LOW: possilbe liquidity crisis. Much more conservative ratio

depreciation – the loss in value of a fixed asset due to wear and tear and the passage of time;or a method of matching the cost of a fixed asset against the revenues that the fixed asset will help produce during its useful life
What are the two ways that an asset bought by a company can be classified? – 1. Acquired for continued use in the business
2. Held as long term business investments
Income from operations – Income from a company's principal operating activity; determined by subtracting cost of goods sold and operating expenses from net sales.
Which оf the fоllоwing is NOT one of the fаctors thаt influences the supply of а product?
Managerial/management Accounting – detailed plans and continuous performance reports that are developed for internal decision makers

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