Financial Accounting Ch 6

15. Transactions related to the primary business activities of the company, such as selling goods and services to customers, are referred to as:
A. Investing activities.
B. Management activities.
C. Operating activities.
D. Financing activities. – C. Operating activities.
Wages – Weekly cash to a casual employee
Economic Entity – A business or organization whose major purpose is to produce a profit for its owners.
What is an estimate of the expected productive life of an asset called? – Estimated useful life
Normal side balance Expenses – Dr
Owner's Equity includes ; – Owner's capital & revenues
Owner's drawings & expenses
What is another term is the same as residual value? – Salvage Value
Liabilities – outsider claims, debts that are payable to outsiders
Terminal value – estimates the enterprise value at the end of the forecast period.
=(last year FCF * (1+growth rate))/ (WACC- growth)
Monetary unit assumption – we can express transactions and in monetary, or money, units.
Which of the following is not a derived quantity?
Revenue Recognition Principle – The revenue recognition principle requires that revenue must be recorded at the time the duties are performed, regardless of when the cash is received.
Gross profit – revenue-costs of goods sold
Which оf the fоllоwing is not а derived quаntity?
(cash flows) payment of notes or bonds payable – financing activities (subtract)
Check – Payment of goods is received
assets – property or items of value owned by a business

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