Accounting 202 Chapter 10

Relevance – Financial information that is capable of making a difference in a decision.
revenues – the increases in stockholders' equity that result from operating a business
permanent accounts are – not closed
price-earnings ratio – reported measure of a company's value; company's market price per share of stock divided by the company's annual earnings per share (eps)
activity-based costing – system a cost assignment approach
that first uses direct and driver tracing to assign costs to activities
and then uses drivers to assign costs to cost objects.
Owner, Capital Revenues – The sales of products or services to customers. Revenues increase equity.
other income – Revenue from sources other than the primary operating activity of a business (interest, rent, and gains resulting from the sale of fixed assets)
Know the equation Assets = Liabilities + Equity (Equity = Assets – Liabilities, Liabilities = Assets – Equity). – 2.
balance sheet – A financial statement that reports assets, liabilities, and owners equity of a specific date
Salaries Expense – Expense
Income Statement
Optimization is used in cluster analysis to determine cluster centers.
When the biz buys a significant amount of supplies on credit, liabilities __ – Increase
useful life – how long a business will expect to keep that asset
390000 – If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is:
declining balance method – double-declining
*depreciation rate is determined by doubling the rate of used in the straight-line method
residual value is initially ignored
book value= residual value
Asset, Balance Sheet, Debit, Permanent – Prepaid Expenses
net credit sales – those revenues generated by an entity that it allows to customers on credit, less all sales returns and sales allowances.
gains/ losses of selling depreciable assets – recorded on income statement
*gain- revenues
Optimizаtiоn is used in cluster аnаlysis tо determine cluster centers.
transaction – any event that effects the financial position of the business and can be measured with faithful representation
Bank statement reconciliation – the process by which the depositor attempts to reconcile the bank statement balance with the checkbook balance.
Consistency – Use of the same accounting principles and methods from year to year within a company

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