Century 21 Accounting Chapter 1

goodwill – purchase price of business – fair market value of its net assets
raw materials – مواد أولية
Purchase allowance – A deduction made to the selling price of merchandise, granted by the seller so that the buyer will keep the merchandise.
The recording of wages earned but not yet paid is an example of an adjustment that – A. Recognizes an accrued expense
Prepaid Insurance – asset, increase and normal balance is debit side, decrease is credit side
Classified balance sheet – A type of balance sheet that groups together accounts of similar nature and reports them in a few major classifications
Price-earning ratio – The relationship between the market value per share and earnings per share of a stock
double-entry account – The recording of debitand credit parts of a transaction.
debit – recorded on the left side
Office Equipment – Normal Balance: Debit
Type of Account: Asset
Financial Statement: BS
[7] Mertens Company provides the following ABC costing information:   Activities                                Total Costs     Activity-cost drivers Account inquiry hours               $200,000             10,000 hours Account billing lines                  $140,000        4,000,000 lines Account verification accounts     $75,000             40,000 accounts Correspondence letters               $ 25,000               4,000 letters    Total costs                               $440,000   The above activities are used by Departments A and B as follows:                                                   Department A      Department B Account inquiry hours               2,000  hours          4,000 hours Account billing lines              400,000  lines        200,000 lines Account verification accounts 10,000  accounts     8,000 accounts Correspondence letters              1,000  letters         1,600 letters   How much of the total costs will be assigned to Department A? A) $79,000 B) $40,000 C) $112,000 D) $440,000
For variable manufacturing overhead, there is no:
a. spending variance
b. efficiency variance
c. flexible-budget variance
d. production-volume variance – d. production-volume variance
partnership – 2/more owners (10% of businesses)
revenue – An increase in equity resulting from the sale of good
[7] Mertens Cоmpаny prоvides the fоllowing ABC costing informаtion:   Activities                                Totаl Costs     Activity-cost drivers Account inquiry hours               $200,000             10,000 hours Account billing lines                  $140,000        4,000,000 lines Account verification accounts     $75,000             40,000 accounts Correspondence letters               $ 25,000               4,000 letters    Total costs                               $440,000   The above activities are used by Departments A and B as follows:                                                   Department A      Department B Account inquiry hours               2,000  hours          4,000 hours Account billing lines              400,000  lines        200,000 lines Account verification accounts 10,000  accounts     8,000 accounts Correspondence letters              1,000  letters         1,600 letters   How much of the total costs will be assigned to Department A? A) $79,000 B) $40,000 C) $112,000 D) $440,000
Acid test Ratio – instant debt paying ability – quick asset to current libilities
Treasury stock – Repurchased shares
Advertising Expense – Normal Balance: Debit
Type of Account: Expense
Financial Statement: IS
When delivery revenue is earned on account, which accounts increase and decrease? – Accounts Receivable increase; Revenues increases
Deferred Income – See Unearned Income: Income received before it is earned.

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