Chapter 01 Fundamental Accounting Principles

Debentures – A secured transferable loan instrument that can be listed on the stock exchange
accounting – The process of identifying, measuring, and communicating economic information to permit users to make informed judgments and decisions
What Makes Up the Cost Flow Assumption – 1.what prices should be assigned to the goods that have been sold 2.what prices should be assigned to the goods that remain in inventory
accounts receivable – the right to receive cash in the future from customers for goods sold or services performed
c. – The Inventory Turnover Ratio: measures how quickly a company turns over its merchandise
Going Concern – assumes business will fully indefinitely ink the foreseeable futyre, justifies one of historical cost.
*fees earned* – Revenue from providing services.
The definition of environment includes ______.
Cost effectiveness – Financial accounting information
is provided only when the benefits of doing so exceed
the costs.
Google, an internet search firm, would be classified as:
a. a manufacturing-sector company
b. a merchandising-sector company
c. a service sector company
d. None of these answers are correct. – c. a service sector company
IASB – International Accounting and Standard Boards
principles of fair value – Indicates that assets and liabilities should be reported at fair value (the price received to sell an asset or settle
a liability).
sources of funds – the various places that finances for the firm have come from
Revenue, Income Statement – Type and Statement for: Interest Earned
The definitiоn оf envirоnment includes ______.
Funds – Money to operate the business coming from
1. ?? contributed by investors (owners)
2. Borrowing money
If the selling price per unit of a product is $50, variable costs per unit are $40, and total fixed costs are $50,000, a company must sell 6,000 units to make a target operating income of $10,000. – True
Matching concept – a primary goal of accural accounting is appropriately match expenses and revenue
convertible bonds – converted into common stock

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