Accounting Chapter 9 Vocabulary

Certified Public Accountant (CPA) – independent account that is not an employee of the company being audited and has no financial or other compromising ties with it
List all of the accounts and their balances after updating account balances for adjusting enrieries ICLICKER – An adjusted trial balance
Credit – when you buy property and agree to pay for it later.
Working Capital – current assets – current liabilities
+ = more likely to pay liabilities
– = might not be able to pay short term debt
Wages. – A form of compensation usually for skilled and unskilled labor, expressed in terms of hours, weeks or pieces completed.
Patent – an exclusive right to manufacture a product or use a process
Endorsement – A signature or stamp on the back of a check, transferring ownership.
When the biz buys a significant amount of supplies on credit, liabilities __ – Increase
Accounting – A system that collects and processes financial information about an organization and reports that information to decision makers.
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.
An independent contractor's physical conduct is controlled, or subject to control, by his or her employer.
Statement of Retained Earnings – Changes that have taken place in the retained earnings account during the fiscal period

Prepared as a supporting document for the balance sheet

sole proprietorship – company with a single owner
An independent cоntrаctоr's physicаl cоnduct is controlled, or subject to control, by his or her employer.
Operating Margin – Operating Income / Net Sales

Amount of $ from sales per dollar after recovering expenses

Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
A. Purchases.
B. Freight-in.
C. Cost of Goods Sold.
D. Purchase Discounts. – C
Adjusting Entry – Recognizes portion earned as revenue and reduces the balance of a liability account. Done so that the financial statements reflect the revenues that have been earned and the expenses that were incurred. Involves one income statement account and one balance sheet account. (The purpose of each adjusting entry is to get both the income statement and the balance sheet to be accurate.)

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