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Accounting Q1 & Q2
Review
| Question | Answer |
|---|---|
| Assets: + on left or right? | left (debit) |
| Assets: - on left or right? | right (credit) |
| Drawing: + on left or right? | left (debit) |
| Drawing: - on left or right? | right (credit) |
| Expenses: + on left or right? | left (debit) |
| Expenses: - on left or right? | right (credit) |
| Revenue: + on left or right? | right (credit) |
| Revenue: - on left or right? | left (debit) |
| Capital: + on left or right? | right (credit) |
| Capital: - on left or right? | left (debit) |
| Liabilities: + on left or right? | right (credit) |
| Liabilities: - on left or right? | left (debit) |
| those expenses associated with administrative or office operating expenses | general expenses |
| refers to the speed with which an asset can be converted to cash | liquidity |
| net sales minus cost of goods sold | gross profit |
| cash and all other current assets that can be converted into cash quickly | quick assets |
| cost of plant and equipment less the accumulated depreciation amounts | book value |
| this statement shows a step-by-step calculation of net sales, cost of goods sold, gross profit, operating expenses, income from operations, other revenues and expenses, and net income | multiple-step income statement |
| assets that are expected to be used for more than one year in the operation of a business | fixed assets |
| gross sales less sales returns and allowances and sales discounts | net sales |
| the number of times the merchandise inventory turned over, or was sold, during the accounting period | inventory turnover |
| current assets divided by current liabilities | current ratio |
| those obligations that will extend beyond one year or the normal operating cycle, whichever is longer | long-term liabilities |
| the number of times the accounts receivable turned over, or were collected, during the accounting period | accounts receivable turnover |
| those obligations that are due within one year or the normal operating cycle of the business, whichever is longer, and will require the use of current asstes | current liabilities |
| cash and all other assets expected to be converted into cash or consumes within one year or the normal operating cycle of the business, whichever is longer | current assets |
| quick assets divided by current liabilities | quick ratio |
| a trial balance taken after the temporary owner's equity accounts have been closed | post-closing trial balance |
| a written agreement specifying that if the borrower does not repay a debt, the lender has the right to take over specific property to satisfy the debt | mortgage |
| an account that is used to reflect an obligation that is secured by a mortgage on certain property | mortgage payable |
| gross profit minus operating expenses on a multiple-step income statement | income from operations |
| sales - sales returns & allowances -sales discounts | net sales |
| purchases - purchases returns & allowances - purchase discounts | net purchases |
| beginning inventory + net purchases | cost of goods available for sale |
| beginning inventory + net purchases - ending inventory | cost of goods sold |
| net sales - cost of goods sold | gross profit |
| beginning capital + owner's investment + net income - net loss - owner's withdrawals (drawing) | ending capital |
| cash, notes receivable, accounts receivable, merchandise inventory, prepaid insurance, supplies | current assets |
| accounts payable, notes payable, wages payable, unearned revenue, current portion of mortgage payable | current liabilities |
| land, building, equipment | plant (fixed) assets |
| mortgage payable | long-term liabilities |
| current assets divided by current liabilities | current ratio |
| current assets - current liabilities | working capital |
| net credit sales divided by average accounts receivable | accounts receivable turnover |
| cost of goods sold divided by average inventory | inventory turnover |
| 365 days divided by accounts receivable turnover | age of accounts receivable |
| 365 days divided by inventory turnover | age of inventory |
| plans and procedures built into the accounting system with the following objectives: 1- to protect assets against fraud and waste 2- to provide accurate accounting data 3- to promote an efficient operation 4- to encourage adherence to mgmt policies | internal control |
| a business form prepared by the seller that lists the items shipped, their cost, the terms of the sale, and the mode of shipment. it may also state the freight charges. | invoice |
| a written order from the buyer of goods to the supplier, listing items wanted and the terms of the transaction | purchase order |
| a form used to request that the purchasing department buy something. this form is intended for internal use within a company | purchase requisition |
| a stock of goods that a company buys and intends to resell, in the same physical condition, at a profit | merchandise inventory |
| books or original entry in which specialized types of repetitive transactions are recorded (used instead of general journal for specific transactions) | special journals |
| a group of accounts representing individual subdivisions of a controlling account (shows details of a T account) | subsidiary ledger |
| financial statement concerning net sales and net purchases | income statement |
| which bad debts method is considered OK for taxes? | direct/specific write-off method |
| the last step in the accounting cycle | post-closing trial balance |
Created by:
leahmurphy
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