Principles Of Accounting Level 1 Chapter 1

assets taken from the business for the owners personal use – withdrawals
what are the 3 guidelines for ethical decisions – identify ethical concerns
analyze options
make ethical decisions
Correcting entry – Journal entry made to correct an error in the ledger
Declining-balance method – Method that determines depreciation charge for the period by multiplying a depreciation rate (often twice the straight-line rate) by the asset's beginning-period book value.
Canceled checks – Checks returned to the depositor that have been paid by the bank are
Two accounts most commonly listed in the stockholders' equity section of the balance sheet – Common stock and retained earnings
Chronic disease of inner ear characterized by dizziness and ringing in ear:
perpetual – Inventory system that maintains records of each inventory purchase and sale
trail balance – a work paper proving the equality of the debit and credit balances in the ledger
Vertical Analysis – each item on a report is shown as a percentage of a total base
Maker. – An individual who promises to pay on a promissory note; an individual who signs a promissory note.
accounting information with external users – -investors need to know how profitable a company is compared to competitors
-regulators need to know rate increases are justified
-creditors need to know the company has the ability to repay its loans
FOB Shipping point – Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.
weighted average cost of goods sold – ((total * price X) + (total * price Y)) / total number of units
Chrоnic diseаse оf inner eаr chаracterized by dizziness and ringing in ear:
Worksheet – Accounting form used to summarize general ledger information and used to prepare financial statements
When there is excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price when:
a. incremental revenues exceed incremental costs
b. additional fixed costs must be incurred to accommodate the order
c. the company placing the order is in the same market segment as your current customers
d. it never makes sense – a. incremental revenues exceed incremental costs
historical cost principle – assets are recorded and reported at original purchase price

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