working capital will increase. If a company uses its cash to pay for a new vehicle or to expand one of its buildings, the company’s current assets will decrease with no change to current liabilities. Therefore working...
working capital will increase. If a company uses its cash to pay for a new vehicle or to expand one of its buildings, the company’s current assets will decrease with no change to current liabilities. Therefore working...
-on experience. Don’t be overly concerned with the starting pay since your value will come after you demonstrate your proficiency as an effective bookkeeper. Join PRO to Track Progress Mark the Question as Read...
MNPEYTEUMNOL Unscramble UNEMPLOYMENT EYMOUPEMNNLT Unscramble 4. The ________ unemployment tax is often a net rate of 0.6% of each employee's first $7,000 of annual wages. FEDERAL EDELRAF Unscramble FEDERAL ELREAFD...
What is the inventory turnover ratio? Definition of Inventory Turnover Ratio The inventory turnover ratio is an important financial ratio that indicates a company’s past ability to sell its goods. Converting inventory...
is that a small percent of customers will not pay the full amount. After reviewing the customers’ balances the company estimates that $10,000 of the $1,000,000 will not be collected. Rather than waiting until the...
of its customers. Ace requires that the customer pay $50,000 before Ace begins to design and construct the machine. The $50,000 payment is made in December 2023 and the machine must be finished by March 31, 2024. The...
, when a cash dividend or stock dividend is declared. There are many other situations as well. Here are some specific examples when only the left side of the accounting equation is affected. 1) A customer cannot pay an...
$2,000 for purchases made 40 days ago. Since Jim does not have the money to pay the supplier, he offers to mail the supplier two $1,000 checks: one check dated for June 20 and the other check dated for July 20. The...
What is self-insurance? Self-insurance means no insurance. For example, if a retailer decides to self-insure its buildings, the retailer will not have an insurance policy to pay for losses that may occur to its...
purchased and the company’s standard cost per pound for the raw materials that were purchased. (The standard cost per pound is the cost that the company expected to pay for the year and was included in the company’s...
to pay off the loan, the company will have no liability. If the supplier fails to repay the bank, the company will have an actual liability. If a company is sued by a former employee for $500,000 for age discrimination,...
will be recorded in the inventories and the cost of goods sold accounts. Since the company must pay its vendors and production workers the actual costs incurred, there are likely to be some differences. The differences...
will record an account receivable when it delivers a truckload of goods to a customer on June 1 and the customer is allowed to pay in 30 days. From June 1 until the company receives the money, the company will have an...
was $300,000 and the average inventory was $150,000 the inventory on average turned to cash only 2 times during the year. When inventory items are slow to be converted into cash, the company’s money is sitting in...
What is the meaning of aging? Definition of Aging In accounting, the term aging is often associated with a company’s accounts receivable. Accounts receivable arise when a company provides goods or services and allows...
payable will require the issuer/borrower to pay interest, the issuing company will have interest expense. Under the accrual method of accounting, the company will also have another liability account entitled...
How do I start a petty cash fund? Definition of Petty Cash Fund A petty cash fund is a small amount of money available to pay small amounts without requiring the processing of a business check. Example of Starting a...
customers. The contract requires the customer to pay TOPCO $5,000 when the contract is signed and the remainder of $20,000 to be paid when TOPCO delivers the machine within 30 days of the signing. When TOPCO receives...
in the bank’s records. This process is known as the bank reconciliation. Examples of Checking Accounts Companies often have several checking accounts. For example, it may have a separate checking account for each of...
to the lessee for a small additional payment. Examples of Leases A person or business might lease a suite in a large building for a one-year period. The lease agreement states that the lessee will pay the lessor $1,200...
and a stated interest rate of 6% per year. This means that the bond issuer is obliged to pay the following amounts: $30,000 of interest every six months until the bond matures ($1,000,000 X 6% X 6/12) $1,000,000 at...
. However, a company’s liquidity is dependent on converting the current assets to cash in time to pay its obligations. Example of Current Ratio If a company’s current assets are $600,000 and its current liabilities...
between interest expense and interest payable, let’s assume that a company borrows $200,000 on November 1 at an annual interest rate of 6%. The company is required to pay each month’s interest on the 15th day of the...
What does 2/10 mean in accounting? Definition of 2/10 2/10 is part of an early payment discount that allows a customer or client to pay after the sale or service has been provided. This sales discount...
. An unrelated customer asks the company to inform them of the price for constructing a specific residence. The company prepares a detailed calculation of the final price that the customer will pay. The price will...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
side of a general ledger account? Select... Debit Credit 14. A sale is made with credit terms that allow the customer to pay in 30 days. Under the accrual method of accounting, which account should be debited at the...
, its working capital is $20,000. Current Ratio The current ratio is also an indicator of a company’s ability to pay its current obligations. The calculation is: current assets divided by current liabilities. If a...
receivable sorts a company’s unpaid __________ according to the date that the customer should pay the company. Select... purchase orders sales invoices vendor invoices 17. Credit terms of 2/10, net 30 result in...
Our Explanation of Bookkeeping provides you with a rich understanding of the recording of transactions. It then discusses the additional steps necessary for preparing accurate financial statements. This is great for...
method. Examples include accounts receivable, interest receivable, prepaid expenses, accounts payable, accrued liabilities, interest payable, deferred revenues, and others. 3. Which of the following is more descriptive...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
expenses. Mark as wrong Mark as right liability account This type of general ledger account is used for recording obligations including deferred revenues and accrued expenses. liability account This type of general...
. They are also period costs (as opposed to product costs). Mark as wrong Mark as right matching principle This basic underlying accounting principle requires that some expenses and liabilities be accrued or deferred....
in December but allows the customer to pay 30 days later, the company’s December sales are $75,000 (even though no cash was received in December). Reporting revenues in the period in which they are earned is known as...
Means Cash Not Spent If the balance in a company’s Accounts Payable account has increased, accountants will assume that the company did not pay for all of the expenses that were included in the current period’s...
. On each June 30 and December 31, the corporation must pay interest of $60,000 ($2,000,000 X 6% X 1/2 year). The corporation must also amortize the bond discount and the bond issue costs. The following are...
$40,000. Some reasons for the wide salary range include the size and location of the company, the bookkeeper’s responsibilities, the bookkeeper’s experience with accounting and other software, the ability to get...
receivable is critical for a company to pay its obligations when they are due. The calculation of the accounts receivable turnover ratio is: credit sales for a year divided by the company’s average amount of accounts...
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