Accountancy

2. What is the primary purpose of financial accounting?
A. Determine the amount of tax liability owed to the government.
B. Communicate business transactions to internal management.
C. Measure business transactions and communicate those measures to external users to make decisions.
D. Measure the profitability of the company in order to assist employees with making decisions. – C. Measure business transactions and communicate those measures to external users to make decisions.
Operating Income – Gross Profit – Total Operating Expenses
Equity – The owner's claims on assets, and is equal to assets – liabilities.

*Also called net assets or residual equity.

Fixed Charge Coverage Ratio – (Net Income + Interest Expense + Rent Expense + Income Tax Expense)/(Interest Expense + Rent Expense)
*Rule of thumb 3-4
LEAN THINKING MODEL – ORGANIZES RESOURCES AROUND THE FLOW OF BVUSINESS PROCESS AND PULLS UNITS THROUGH THESE PROCESSES IN RESPONSE TO CUSTOMER ORDERS
Posting – transfer of information from a journal to the general ledger and any subsidiary ledgers
Output Devices – Component of accounting system: These allow the user to see the accounting information. In a computerized accounting system, these include monitors, printers, printed reports, and output to files.
Retired – But back of bonds from investors
High performance work strategies include which of the following?
Net Income – REVENUE Greater than EXPENSES = NET INCOME
Entity – Anything having its own separate identity, such as an individual, a town, a university, or a business.
Segregation of duties – Related tasks should be assigned to different people. One serves as check on the other. Ideally, the person who records credit sales should not be the same person who records the collections of A/R from customers. The person who records collections should be someone other than the person who opens mail and makes deposits. The related roles of purchasing & receiving & paying for goods should be separated. The person who keeps track of the company's equipment and property should not have physical control or possession of the assets.
High perfоrmаnce wоrk strаtegies include which оf the following?
revenue – An increase in owner's equity resulting from the operation of a business.
Pain in Capital – Amount invested by owners

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