Accounting Chapter 1 Vocabulary

Accounting system – A planned process for providing financial information that will be useful to management.
Ex. Of

Cash inflow

Cash outflow – Inflow: ex. Collections from customers

Outflow: ex. Sale of propiety

What is the entry to record revenue if a customer pays when the service is delivered? – Increase cash (asset, balance sheet) and increase revenue (income statement)
Principle of duality – Basis of double-entry bookkeeping system
Accounts payable – This type of account represents the amount that a company owes to its suppliers (vendors) for goods purchased or services received on credit and are considered a current liability.
current liabilities – Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets.
earnings per share ratio – measure net income earned on each share of common stock
A process designed to accumulate, classify, and summarize financial data. – Accounting System
Purpose of Financial Statement Analysis – present financial information in a format that facilitates the analysis and interpretation of a company's performance
Put the layers of the skin in order with 1 being the most superficial and 8 being the most deep.
Revenue recognition principal – Has performance obligations, therefore requires the companies to recognize revenues in accounting period in which the performance is satisfied
uncollectible accounts – accounts receivable that cannot be collected
costs of goods sold equation – net sales-cost of goods sold=gross profit
Put the lаyers оf the skin in оrder with 1 being the mоst superficiаl аnd 8 being the most deep.
Accounts receivable – amount owed to the business for items sold on credit.
The transferal of data from journal tot he ledger is: – Posting
Profit Margin Ratio – Net Income / Net Sales
how much the selling price covers expenses

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