Financial Accounting Ch 5

LEAN THINKING MODEL – ORGANIZES RESOURCES AROUND THE FLOW OF BVUSINESS PROCESS AND PULLS UNITS THROUGH THESE PROCESSES IN RESPONSE TO CUSTOMER ORDERS
footnotes – additional information provided along with the four financial statements
Promissory Note – A written promise to pay money to another person or business at a specified or determinable time
Financial Position – the economic resources that a company owns and the sources of financing for those resources
Entity – Any organization that stands apart as a seperate economic unit
debit – An amount recorded on the left side
Income statement – Financial statement that subtracts expenses from revenues to yield a net income or loss over a specified period of time; also includes any gains or losses
Costing systems with multiple cost pools are considered ABC systems. – False
Bookkeeper/Information Processor. – One who is involved in the process of recording financial information in a prescribed manner.
If an auditor dates the auditor's report on financial statements for the year ended December 31, 2013, as of February 10, 2014, except for Note J, as to which the date is March 3, 2014, the auditor is acknowledging responsibility to actively search for and ensure proper handling by management of
Expenses – the dollar amount of resources the entity used to earn revenues during the period (tax expense, etc)
Going Concern Principle – The going concern principle assumes that a business will continue to operate into the foreseeable future.
service revenue – sales of services for cash or on credit
Fundamental Accounting Equation – assets = liabilities + owner's equity
Corporation – Business that is a separate legal entity under state or federal laws with owner called shareholders or stockholders
If аn аuditоr dаtes the auditоr's repоrt on financial statements for the year ended December 31, 2013, as of February 10, 2014, except for Note J, as to which the date is March 3, 2014, the auditor is acknowledging responsibility to actively search for and ensure proper handling by management of
Dividends – Distributions to stockholders
Purchases Returns and Allowances. – A temporary owner's equity contra account utilized to record the return of merchandise to the manufacturer or supplier as the result of material defects in workmanship and/or inferior product quality.
Straight line – Allocates the same amount of depreciation to each fiscal period
The cost of a machine purchased last year will be irrelevant in a decision for next year. – True
FOB shipping point – that means that ownership transfers from the seller to the buyer when the seller provides the goods to the carrier. It also means that the buyer will pay the transportation cost.

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