Financial And Managerial Accounting Chapter 1 Terms

Long-term investments – meaning those we expect to hold for more than one year. Some common long-term investments include notes receivable, investments in the stock or bonds of another company, and land that a company is holding for a future plant site. Companies often purchase stock of another company in order to control or own the other company.
Adjusting LIFO inventory to FIFO (BS) – FIFO Inventory = LIFO inventory +LIFO Reserve
It is best to compare this year's performance with last year's actual performance rather than this year's budget. – False
Statement of Owners Equity – Shows beginning OE(capital), events that increase it(owner investments and Net Income), events that decrease it(withdraws and net loss).
Working Capital as Percentage of Sales – (Current Assets – Current Liabilities)/Sales
*Whether business has sufficient assets to operate daily
FALSE – To determine the cost of goods sold under a periodic inventory system, the following steps are necessary:
1. Add to it the cost of goods purchased.
2. Subtract the cost of goods on hand at the end of the accounting period
3. Determine the cost of goods on hand at the beginning of the accounting period
petty cash slip – a form showing proof of a petty cash payment
Debtors – People that owe money to a business
Identify The Structure at A
GAAP – Reports that allow investors and other users to compare one company to another
Historical costs – Amount you paid for mercy has to be recorded
Identify The Structure аt A
Debt to Equity Ratio – (Total Liabilities)/(Total Shareholders' Equity)
*Assessing risk for investors; higher ratio means higher risk
Accounting for rework in a process-costing system:
a. accounts for normal rework in the same way as a job-costing system
b. requires abnormal rework to be distinguished from normal rework
c. if the rework is normal, then rework is accounted for in the same manner as accounting for normal rework common to all jobs
d. All of these answers are correct. – d. All of these answers are correct.
Depreciation Expense – Expense
Income Statement
Debit

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