Basic Accounting Terms

Unearned revenues – Balance sheet
Current liab.
Cash 3430
Sales Discounts 70
Accounts recievable 3500 – Seller offers a discount for paying within a defined period
PW Audio offers 2/10, n/30 terms on $3500 of
Sauk pays within the discount period. Buyer pays within discount period($70 discount) how does seller record the discount
Purpose of the financial statements – To provide timely information about the earnings and cash flow. Assess strengths and weaknesses. Help stakeholders assess the companies performance and decisions
Going Concern Concept – Financial reports are prepared on the assumption that the life of a business is expected to continue into the foreseeable future.
Buying-in – Submitting an offer below anticipated costs, expecting to increase the contract amount after or receive follow-on contracts at artificially high prices to recover losses incurred on the initial contract
*sales* – The total amount charged customers for merchandise sold, including cash sales and sales on account.
accounting equity – Financial affairs of the business must be separate from the personal affairs owner. e.g house, mortgage, car, furniture, personal bank account, computer- All Personal Affairs
Gross Profit – net sales minus cost of goods sold is
maturity date – the date on which payment is due on a promissory note
Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?
multiple-step income statement – Income statement format that shows subtotals between sales and net income, categorizes expenses, and often reports the details of net sales and expenses.
The left side of the standard account is called the – Debit side
Principal. – The face value of a promissory note upon which interest in computed.
Sales allowances: refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price. – f.
Which of the following must be added to the beginning retained earnings to compute ending retained earnings? – net income
Which оf the fоllоwing costing systems is more аccurаte for overheаd cost allocation and most likely to allow managers the ability to make better pricing decisions?
Revenue recognition – Revenue recorded only when earned, not when cash received
Work in process – That portion of manufactured inventory that has begun the production process buy is not yet complete.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply