College Accounting Chapters 14

Accounting records – Organized summary of your financial activities
Correcting entry – a journal entry made to correct an error in the ledger
Controlling Account – An account in a general ledger that summarizes all accounts in a subsidiary ledger.
Sanders Company has a debit balance of $7,000 in its Allowance for Doubtful Accounts before any adjustments are made. Based on a review of its accounts receivable at the end of the year, Sanders estimates that $70,000 of its receivables are uncollectible. The amount of bad debts expense which should be reported for the year is
A. $7,000.
B. $77,000.
C. $70,000.
D. $63,000. – B
Under the percentage-of-receivables basis, the amount of bad debt expense is the difference between the required balance and the existing balance in the allowance account.
A. True
B. False – TRUE
charge sale – whenever a purchase is made and its not paid for in full at time of purchase
Seller (account receivable) Buyer (account payable)
"Days of Inventory on Hand" Classify, Calculate, and Interpret. – Activity Ratio

Days of Inventory On Hand = [ 365 / Inventory Turnover ] AKA: Average Inventory Processing Period; Number of Days of Inventory; or Days of Inventory on Hand

Close to industry Norm.
Too HIGH, too much capital is tied up in inventory and could mean that the inventory is obsolete.
Too LOW, might indicate that the firm has inadequate stock on hand

collection of note rec – note + interest – collection fee
Business ethics – The use of ethics in the making of a business decision.
equity – in finance, in general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off; for example, a car or house with no outstanding debt is considered the owner's equity because he or she can readily sell the item for cash
How would you record the following transaction? On March 1, 2018, Carter's Clothing purchased 76 children's T-shirts as inventory from its supplier for $1,520 and paid on credit.
weaver – A person who's job is weaving cloth.
operating cycle – average time required to purchase inventory, sell it on account, and then collect cash from customers
Hоw wоuld yоu record the following trаnsаction? On Mаrch 1, 2018, Carter's Clothing purchased 76 children's T-shirts as inventory from its supplier for $1,520 and paid on credit.
Fully Depreciated Assets – Have zero residual value even though you may use the equipment for several more years, you will not record any more depreciation
– When they dispose of this equipment, they remove both the asset's cost and accumulated depreciation from the books
*Journal Entry: debit accumulated depreciation and credit the asset (full)
board of directors – a group of persons elected by the stockholders to manage a corporation
balance sheet – statement of financial position
reports the assets, liabilities, and stockholders' equity of a business enterprise at a specific date
The Consistency Principle – Business should apply the same accounting choices and methods year after year

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