Accounting Basics

Sell at Split-off or Process Further Formula – Final sales $ after further processing
less Sales $ at the split-off point
= Incremental revenue from further processing
less Cost of further processing
= Profit or loss from further processing

Process further if it is profitable to do so and there is a market for the product.

Key Trends (FIFO vs. LIFO) – During periods of increasing prices (inflation), using FIFO results in (1) lower COGS and therefore higher Gross Profit & Net Income on the Income Statement; and (2) higher Ending Inventory on the Balance Sheet. Note: the opposite effect would occur during periods of decreasing prices (deflation)
All transactions can be recorded in a special journal. – False
purchase invoice – a document that provides support for each purchase
accounting equation – assets= L+Owners's equity
Purchase requisition – a form used to request the responsible person or department to purchase merchandise or other property.
Service Business – A business that sells services.
How did the Fieldwork Assignment – Beginning Observation help you understand the importance of Participant observation, not just interviewing or surveys.  You can also use the textbook to answer this question.
Operating expenses include all of the following except
A. advertising expense.
B. freight-out.
C. insurance expense.
D. interest expense. – D
Sales Tax Payable – Normal Balance: Credit
Type of Account: Liability
Financial Statement: BS
Permanent accounts – Accounts used to accumulate information from one fiscal period to the next. Balance sheet accounts
For best results, cost management emphasizes independently coordinating supply chain activities within your company and not interfering with other companies. – False
Note payable within a year – Current liabilities
retained earnings statement – A summary of the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.
Hоw did the Fieldwоrk Assignment – Beginning Observаtiоn help you understаnd the importаnce of Participant observation, not just interviewing or surveys.  You can also use the textbook to answer this question.
Budget Period – The intervals of time (usually 12 months) into which a project period is divided for budgetary and funding purposes.
verifiable – the quality of information that occurs when independent observers, using the same methods, obtain similar results
Classify – Financial Statements
costo de reposición – replacement cost
Debt to Capital – Total Interest Bearing Debt/(Total Interest Bearing Debt+Owners' Equity

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