College Accounting Chapters 14

Accounting information must be – Relevant
Reliable
Comparable
Consistent
Revenues – Are recognized when earned which means the goods or services are provided; not when cash is collected
# of days in year/ accounts receivable turnover – # days in collection period
-how long it takes to collect average accounts receivable
Assets – Resources owned by a firm
The manufacturing overhead costs budget includes budgeted amounts for:
a. direct materials
b. direct manufacturing labor
c. indirect manufacturing labor
d. All of these answers are correct. – c. indirect manufacturing labor
Net income – the amount of revenue that remains after expenses for the period are subtracted.
IASB – The International Accounting Standards Board
GAAP – Generally accepted accounting principles.
unadjusted trial balance – List of accounts and balances prepared before accounting adjustments are recorded and posted.
ROA profit driver analysis – decrease in ROA from previous year means firm earned X less for each $ of investment (vis versa)
Major fructose sources include:
Deferred income – Income received but not yet earned is
home run – large gain in short period
An account which offsets another account: – Contra account
Depreciation – The allocation of the cost of an asset to expense over its useful life in a rational and systematic manner.
True or False:

Most companies uses cash basis accounting – False. They use accrual accounting.

T Account – a skeleton form of an account used for instructional purpose.
Mаjоr fructоse sоurces include:
activity output measure – the number of times an activity is performed.
It is the quantifiable measure of the output.
Accounting Period Cycle – changes in financial information are reported for a specific period of time in the form of financial statements
Board of Directors – makes the decision as to who will be hired as the company's CEO or President
expense – A decrease in owners equity resulting from the operation of a business

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