College Accounting Chapters 14

Work sheet – A columnar accounting form used to summarize the general ledger info needed to prepare financial statements
business transaction – a business event, such as buying, selling, or exchange of goods that causes a change in assets, liabilities, or equity
Check Stub. – A form on which information is recorded by the drawer of a check concerning the check drawn; a source document.
last in first out inventory cost flow method – using the price of merchandise purchases last to caluclate the cost of merchandise sold first (lifo)
Historical cost principle – assets must be recorded at historical cost: cash paid plus current dollar value of all non cash considerations given on date of exchange
Source Documents – slips, receipts are of original entry
BOOK VALUE (OF A PLANT ASSET) – THE ASSET'S COST MINUS ACCUMULATED DEPRECIATION
23.OFHEO – Office of Federal Housing Enterprise-the federal regulatory body that oversees the government-sponsored entities (GSEs), Freddie Mac and Fannie Mae. Agency charged with ensuring capital adequacy, a ratio of a bank's capital to its risk, and financial safety and soundness of Fannie Mae and Freddie Mac.
Sweating is a method the body uses to:​
Accounting Records – Organized summaries of a business's financial activities.
Short-term notes receivable are reported at
A. cash (net) realizable value.
B. face value.
C. gross realizable value.
D. maturity value. – A
An amount owed by a business – Liability
(Purpose of) Statement of Financial Position – To measure assets, liabilities and equity at one point in time for the entity.
Sweаting is а methоd the bоdy uses tо:​
growth stocks – stocks that pay low divedends but are expected to grow
Adjusting entry for prepaid expense – Results increase (a debit) to an expense account and a decrease (a credit) to an asset account
8. An audit of a company's financial statements requires that the auditor
1. use deductive logic because the auditor must form an opinion after looking at all of the company's transactions for the time period represented on the company's financial statements
2. use deductive logic because the auditor must make a judgment about the company's financial statements after sampling the company's transactions for the time period represented on the company's financial statements
3. use inductive logic because the auditor must form an opinion about the company's financial statements after looking at all of the company's transactions for the time period represented on the company's financial statements
4. use inductive logic because the auditor must make a judgment about the company's financial statements after sampling the company's transactions for the time period represented on the company's financial statements – 4. use inductive logic because the auditor must make a judgment about the company's financial statements after sampling the company's transactions for the time period represented on the company's financial statements
When the biz buys equip w/ $, liabilities __ – No effect
Recognition Criteria – Definition, shows up on the financial statment. It can be measured, the attribute is relevant and is reliable.

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