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20 Cards in this Set
- Front
- Back
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What is a business? What is the objective of most businesses?
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Organization in which basic resources are assembled and processed to provide goods or services to customers.
The objective is to maximize profits. |
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What are the types of businesses?
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Manufacturing, merchandising, service
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What are the most popular forms of businesses?
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Partnership (two or more individuals)
Corporation (organized under state or federal statues as a separate entity) Proprietorship (owned by one individual) Limited liability company (organized like a corporation by may be taxes as a partnership) |
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What is a business stakeholder?
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A person or entity that has an interest in the economic performance and well-being of a business.
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What is the role of accounting in business?
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Information system that provides reports to stakeholders about the economc activities and condition of a business
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What is an asset? A liability? Stockholders equity?
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Asset- The resources owned by a business
Liability- The rights of creditors that reresent a legal obligation to repay an amount borrowed according to terms of the borrowing agreement Stockholders equity- The stockholders' rights to the assets of a business |
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What is revenue? Expense? How do you calculate net income?
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Revenue (increases in assets from selling products or services) - expense (cost used to earn revenue) = Net Income
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What is the basic accounting equation?
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Assets = Liabilities + Stockholder's Equity
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Which type of transactions increase revenue? Expense? Assets? Liabilities? Stockholders' equity?
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Assets are increased by cash and land, liabilities by notes payable, stockholders' equity by capital stock and retained earnings.
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Accrual accounting
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Revenue is recorded when it is earned
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What is gross profit? How do you calculate?
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Sales minus the cost of merchandise sold
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What is a sales discount? what do the terns FOB shipping point and FOB destination mean?
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Sales discount- From the seller's perspective, discounts that a seller can offer the buyer for early payment
FOB destination- seller pays transportation costs FOB shipping point- buyer pays transportation costs |
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Sarbanes-Oxley Act?
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To restore public confidence and trust in the financial statements of companies
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What is internal control? Objectives of IC?
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Procedures and processes used by a company to safeguard it's assets. Objectives are to deter fraud and prevent misleading financial statements.
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Elements of internal control? Who's responsible?
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Control the environment, risk assesment, control procedures, monitoring, information and communication. Management is responsible.
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How do you prepare a bank reconciliation?
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Nichole knows nothing!!!
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What is a note receivable? How do you calculate interest and maturity value?
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Written claim against debtors who promise to pay the amount of the note plus interest at an agreed-upon rate.
$ borrowed x __% x days/360 = interest |
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What is the net realizable value of accounts receivable?
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The amount of cash expected to be realized in the future.
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Three inventory cost flow assumptions?
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FIFO, LIFO, and average cost
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How do you calculate the lower of cost or market value?
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Multiply inventory by unit cost price, then unit market price and take the lower of the two.
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