Accounting Quiz 3 Laurie Wood

Cash Flow Adequacy – A measure intended to help bankers and creditors with a company's ability to meet it principal and interest obligations.
Contra-account – Account that has the effect of reducing the balance in another account
Profit margin ratio – net income/net sales
a form to correct the amount on the bank statement and cash ledger – bank reconciliation
cost constraint – cost to provide info should be weighed against benefit users will gain from having info available
Plant asset age – The approximation of the age of plant assets, which is estimated by dividing accumulated depreciation by depreciation expense.
TEST!! Separation of duties – Authorization, custody of assets, record keeping
owner's equity – the amount remaining after the value of all liability's is subtracted from the value of all assets
Select all of the TRUE statements.
write-down – total cost – LCM valuation
effects of stock dividends and stock splits – similar to cutting a pie; more pieces of less value
withdrawals – subdivision of of owner's equity that records money or other assets an owner withdraws from a business for personal use never for company purpose
Select аll оf the TRUE stаtements.
Adjusting Entries – Journal Entries recorded to update general ledger accounts at the end of a fiscal period.
Three liquidity tests are: – working capital, current ratio, acid-test ratio

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