Intro To Accounting 20653 Exam 2 Laurie Wood Tcu

Current assets – assets that are expected to be converted to cash, sold, or consumed during a 12 month period
Credit – An entry on the right side of an account.
The issues which the FASB and IASB must address in developing a common conceptual framework include all of the following except:

A. should a single measurement method such as historical cost be used?

B. should the characteristic of reliability be traded-off in favor of information that is verifiable?

C. should the role of financial reporting focus on stewardship as well as providing information to assist users in decision making?

D. should the common framework lead to standards that are principles-based or rules-based? – C. should the role of financial reporting focus on stewardship as well as providing information to assist users in decision making?

Accounting – Planing, recording, analyzing, and interpreting financial information
# 32. Net income for the month of January is: – Sales Revenue + Rental Revenue minus Advertising Expense minus Cost of goods sold minus salaries expense
What are the four types of adjusting journal entries? – -Accrued Revenues (transaction will occur after the balance sheet date).
-Accrued Expenses (transaction will occur after the balance sheet date).
-Prepaid Expense
-Unearned Revenues
Cash discount – A deduction that a vendor allows on the invoice amount to encourage prompt payment
Quantitative summary of multiple empirical studies of an intervention:
white knight – a person or company that saves another company from an unwanted hostile takeover
board of directors – Group elected by the stockholders to set policy for a corporation and to appoint its officers.
Net Profit Margin – net income / sales
Current Portion of Long-Term Debt – AKA current maturity or current installment. Long term debt is often paid in installments.
-Amount of principal payable within one year
EXAMPLE: mortgage
Fundamental qualitative characteristics – relevant and faithfully represented to be useful.
Give two examples of service businesses. – Should involve businesses that perform activities for a fee.
retailer – an organization that sells to ultimate consumers
Quаntitаtive summаry оf multiple empirical studies оf an interventiоn:
Cash Payments Journal – A special journal used to record transactions involving the payment of cash.
Expense Matching Principle – requires that expenses be recorded when incurred in earning revenue. Matching costs with benefits
When determining the normal spoilage rate, it is calculated based on the number of good units competed, rather than using the number of units started. – true
times interest earned ratio – (net income + interest expense + tax expense) / interest expense
Group One Expenses – those relating to the provision of the good/service itself. Eg Plumber's wages for a plumbing business; advertising

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