Chapter 4 Double Entry Accounting

What is the auditors report? – A report where the auditor will give their opinion on whether the accounts provide a true and fair view of the company.
Understandability – Information presented in a clear and concise fashion so that users can interpret it and comprehend its meaning
trial balance – informal listing of ledger accounts and their balances in the ledger to show equal balancing of debits and credits
formula for declining balance depreciation – Book value x rate
Cash method – only time we will make an entry is when cash is involved
ex: small business
Big 4 – KPMG, PWC, Deliotte, Ernest & Young
Extraordinary income – income earned from sources other than your normal income and entered into the general journal
Cost Effectiveness – is it worth trying to find
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Property rights – creditors' and owners' financial claims to the assets of a business.
Manufacturing cost – Direct labour plus direct materials plus overhead. Are product costs
accounts receivable – current asset, BS, debit
Petty cash – An amount of cash kept on hand and used for making small payments.
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Account balance – the difference between the total debits and the total credits in an account.
business – organization in which basic resources are assembled and processed to provide goods and services
Cash 3430
Sales Discounts 70
Accounts recievable 3500 – Seller offers a discount for paying within a defined period
PW Audio offers 2/10, n/30 terms on $3500 of
Sauk pays within the discount period. Buyer pays within discount period($70 discount) how does seller record the discount
Certified Public Accountant – An individual certified to practice public accounting in a state

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