Accounting 1: Chapter 1 Century 21 9e

Auditors – Trained individuals hired by a company as an
independent party to express a professional opinion of the
accuracy of that company's financial statements.
Owner's Equity – The financial interest of the owner of a business; also called proprietorship or net worth.
GST collected – GST received from customers which is then forward to the ATO.
Financial Accounting Standards Board (FASB) – The authoritative body that has the primary responsibility for developing accounting principles.
Change in an Accounting Estimate – An estimate that changes due to new information, subsequent developments, or improved judgments that impacts current and future periods.
For cash and credit card sales, the asset account Cash is debited for the total of sales and sales tax, but the revenue account Sales is credited only for the total of sales. – True
Unemployment tax payable- federal and state – Liabilities
The process of planning recording analyzing and interpreting financial information – accounting
Balance Sheet – Reports:
1. What the company has and uses to operate the business; called assets
2. What the company owes; called liabilities
3. The amount of the company owned by the owners; called stockholders' equity.
All amounts reported are CUMULATIVE of a specific date.
Assets – The economic resources of the entity and include such items as cash, accounts receivable (amounts owed to a firm by its customers), inventories, land, buildings, equipment, and even intangibles such as patents and other legal rights and claims.
The famous Pepsi challenge had consumers taste two brands of cola without letting them know the brand name of either. Which type of test is this?
gross pay – total compensation earned by an employee
bonds payable – long term amounts owed to investors
Corporation – an organization with the legal rightsof a person and which many persons may own
revenues – increases in owners equity as a result of selling services or products to customers
The fаmоus Pepsi chаllenge hаd cоnsumers taste twо brands of cola without letting them know the brand name of either. Which type of test is this?
current ratio – current assets/current liabilities
this ratio is an important measure of a company's ability to pay its short-term obligations

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