purchases account – A special temporary expense account used to track merchandise purchased for resale by the business. It is included in the Cost of Goods Sold account.
Cash + securities + accounts receivable / current liabilities – How acid ratio may be used
purchase journal – a book of original entry used to record purchases of merchandise on credit only
rate of return on assets – measures overall profitability of assets
Manufacturing Costs (MC) – DM, DL, and MOH
drawee – the person (or bank) who is expected to pay a check or draft when it is presented for payment
Name the 6 accounting concepts aka principles
(Info) – 1. The business is different from the owner
2. Money measurement
3. Objectivity/consistency, prove it!
4. Going concern, is not a fire sale
5. Accrurals: match revenues to expenses in the accounting period
6. Prudence aka conservatism
This leads to detailed rules and regulations, ex. GAAP
What condition did Newton have?
Financial Accounting Information – Information that is provided to external parties who have an interest in a company. Financial accounting refers to information describing the financial resources, obligations, and activities of an economic entity (either an organization or an individiual). Financial accounting information is designed primarly to assist investors and creditors in deciding where to place their scarce investment resources.
(Objectives of financial statements)Benefits exceed costs – benefits to user of financial info should info should exceed cost of preparation
Income – Income is a increase in assets or decrease in liabilities which causes a increase in equity and is not a contribution by the owner.
Whаt cоnditiоn did Newtоn hаve?
international rule makers – IASB
stockholder – a person who owns stock in a corporation.
Stockholders equity – Represents the claims of owners on the assets of the business. Divided into Common stock and Retained earnings
Drawings – the withdraw of money for personal use of the owner
Prepaid expenses will:
A) become liabilities when their future benefits expire
B) become expenses when their future benefits expire
C) become revenues when their future benefits expire
D) become none of the above – B) become expenses when their future benefits expire.