Financial Accounting Final

Trademarks – intangible asset; use a symbol or name
Prepaid insurance/prepaid rent – Prepaid expenses which are treated as assets because they are not yet used.
retail merchandising business – a merchandising business that sells to those who use or consume the goods
Asset Turnover – Sales/Average Total Assets
False – The principles of right and wrong that guide an individual in making personal decisions is called business ethics
Monitoring, in terms of the components of internal control… – Monitoring enables the company to evaluate the effectiveness of its system of internal control over time. pp 9
COMPARABILITY – describes information that is measured and reported in a similar manner for different companies.
Merchandise – goods purchased for resale at a profit
The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a balance sheet and which is based on an estimate of bad debts, is an application of the – expense recognition principle
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accrued liabilities – amounts owed that are not yet paid (example – wages)
EBIT/Operating margin – = operating profit/net sales
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internal users – make planning and control
EBITDA – -income statement
-good estimate for free cash flow
Acid test ratio – Cash + current investment + accounts receivable / current liabilities
Monetary Concept – Record transactions in terms of money
Drawings – Value of goods or cash that the owner took out of the business for personal use

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