Chapter 4 Double Entry Accounting

Mixed-attribute measurement model – is applied to measure different assets and liabilities
Conservatism – When faced with tow relatively equal ways to report an even, a company should choose the accounting method that will be LEAST LIKELY to overstate the assets of the profit
What is the most widely used method of depreciation? – Straight- line method
38. Sooner Company has had a net income of $8,000, $5,000, $12,000, and $10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is $3,000, what is the ending retained earnings balance?
A. $47,000.
B. $35,000.
C. $23,000.
D. $7,000. – C. $23,000.
Accrued Income – Income that has been earned but not yet received and recorded.
Perpetual inventory system – An inventory system under which the company keeps detailed records of the cost of each inventory purchase and sale, and the records continuously show the inventory that should be on hand.
Balance Sheet – A financial statement that reports assets, liabilities and owner's equity on a specific date
If a business selling fast food (burgers, pizza, chicken,etc.) is interested in gaining knowledge of the local culture quickly and wants to share development costs and risks, it should enter a foreign market through
liquidity – availability of resources to meet short-term cash requirements
Salaries Payable – adjusting entry decreases stockholders' equity (retained earnings) and increases a liability
If а business selling fаst fооd (burgers, pizzа, chicken,etc.) is interested in gaining knоwledge of the local culture quickly and wants to share development costs and risks, it should enter a foreign market through
percent change – (2008-2007)/(2007)
Essential characteristics of an asset – future economic benefits, control and past events
account number – the number assigned to an account
physical resources – natural resources
Place the following steps in order for estimating a cost function using quantitative analysis:
A = Plot the data
B = Estimate the cost function
C = Choose the dependent variable
D = Identify the cost driver
a. D C A B
b. C D A B
c. A D C B
d. D C B A – b. C D A B

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