Accounting I: Financial Accounting Ch 1

Prepaid Expense – Cash paid for an expense in one fiscal period that is not used until a later period.
Plant assets – Tangible long-lived assets used to produce or sell products and services
Financing – -Raising cash by issuing stock (equity from stockholders) or borrowing cash (liability to creditor)
Transaction – A business activity that changes assets, liabilities, or owner's equity.
revenue – increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services I the normal course of business
Gross profit – sales revenue for a period less the cost of sales over that same period of time
Current Ratio – A relationship between current assets and current liabilities that provides a measure of a firm's ability to pay its current debts (current ratio = current assets/current liabilities).
retained earnings – -cumulative of net income, net loss, and dividends
Arizona Teak Company paid $54,000 for computers. These computers have an estimated service life of 3 years and a salvage value of $3,000. After one year of use, the book value of the computers will be: – $37,000
accumulated depreciation – total dollar amount that an asset has depreciated
This year, Nilo Inc. granted incentive stock options (ISO) to 230 employees. For financial statement purposes, Nike recorded a $179,200 expense for the estimated value of the ISOs. As a result of this transaction, Nike has a: 
Trial Balance – list of all accounts with their balances to provide a check on the equality of the debits and credits
Outstanding Stock – The number of shares that the stockholders own (the number of shares outstanding in the hands of the stockholders).
– It is issued stock minus treasury stock
Straight-Line Amortization – Is a simplify method of amortizing a bond discount or premium that allocates an equal dollar amount to each interest period.
Quantitative – The amount or size of information
Double entry bookkeeping means an entry is made: – recording equal debits and credits for a single business transaction
reasons for inventory to fall below its recorded cost – 1. it is easily replaced by identical items at a lower cost
2. it becomes outdates or damaged
This yeаr, Nilо Inc. grаnted incentive stоck оptions (ISO) to 230 employees. For finаncial statement purposes, Nike recorded a $179,200 expense for the estimated value of the ISOs. As a result of this transaction, Nike has a: 
Accumulated Depreciation – =depreciation * year
*gross value is always the same
11. Emmitt had the following final balances after the first year of operations: assets, $55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What is the amount of Emmitt's liabilities?
A. $55,000.
B. $30,000.
C. $13,000.
D. $7,000. – B. $30,000.

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