receivable is $92,000. Adjustments to the Allowance account are reported on the income statement as bad debts expense. Now, let’s assume that a company’s inventory has a cost of $15,000. However, at the end of the...
receivable is $92,000. Adjustments to the Allowance account are reported on the income statement as bad debts expense. Now, let’s assume that a company’s inventory has a cost of $15,000. However, at the end of the...
with a prepayment. DEFERRAL EAREDFLR Unscramble DEFERRAL LEREDFRA Unscramble 12. __________ Insurance is an asset account. PREPAID PAIRDEP Unscramble PREPAID APEIPDR Unscramble 13. The type of account that is affected...
for the shipping costs, which will be an expense in January when the sale is reported. The buyer records the purchase, accounts payable, and the increase in inventory on January 2 when the buyer becomes the owner of the...
Is depreciation a direct or indirect cost? Definition of Depreciation Depreciation is defined as the systematic expensing of the cost of an asset such as equipment, building, vehicle, etc. over the useful life of the...
. For example, an account number beginning with a "1" might signify that the account is an asset account, a "6" might signify an operating expense, etc. True Right! Generally, the larger and more...
plant built for a cost of $1 billion will cost $10 billion at the end of a useful life of 25 years. By computing straight-line depreciation based on the historical cost, the income statement will report depreciation...
be reflected in the company’s general ledger accounts: Any unrecorded depreciation up until the time of the sale must be recorded with a debit to Depreciation Expense and a credit to Accumulated Depreciation The...
taxable income, it likely means lower income tax expense. Example Comparing LIFO and FIFO ABC Store purchases a product and then sells them to its retail customers. ABC began on January 2 and purchased 1 unit of product...
a carrying amount or book value of $2,100,000. (The corporation will then amortize the Premium on Bonds Payable to Interest Expense over the life of the bonds.) Definition of Contra Account A contra account is a general...
on December 31 was already in bankruptcy condition, the corporation must adjust its December 31 balance sheet by reducing its net receivables by $200,000 and reporting bad debts expense of $200,000 on its income...
Expense. But as the owner, you are likely to be more upset that the employee cost you $3,000 (10 hours X $300) in lost profits and upset customers. In the above story the opportunity cost was $3,000 of lost profit + the...
costs. For instance, if the managers within the manufacturing facility but not on the assembly line are paid salaries which total $20,000 per month, this cost is a fixed indirect product cost. The equipment maintenance...
What is the cost of goods sold? Definition of Cost of Goods Sold The cost of goods sold is the cost of the products that a retailer, distributor, or manufacturer has sold. The cost of goods sold is reported on the income...
that have been earned but have not yet been taken. vacation pay liability (or) vacation pay payable This general ledger account reports the total amount owed to employees for vacation days that have been earned but have...
Since our Explanation of Cash Flow Statement illustrates how the amounts are determined, you will get a better understanding of this very important financial statement. No longer will you look at only the income...
a corporation’s capital stock when it is bought and sold on a stock exchange. Mark as wrong Mark as right times interest earned (or) interest coverage This is the result of dividing a corporation’s 1) income before...
June rent on June 1, the corporation will debit Rent Expense and will credit Cash. Today’s accounting software will assure that the double-entry system is adhered to. Generally Accepted Accounting Principles (GAAP)...
half of the FICA tax remitted to the federal government is withheld from the employee and half is an expense of the employer? Select... True False 12. Federal unemployment tax is withheld from an employee’s wages or...
. A company purchased the following quantities of Product 39JX for its inventory: 20 units at $20 = $400 40 units at $21 = $840 40 units at $23 = $920 The weighted-average cost of Product 39JX is $__________ per unit....
divided by $1,000,000). If the cost of goods sold amount is $780,000 it will be presented as 78% ($780,000 divided by sales of $1,000,000). If interest expense is $50,000 it will be presented as 5% ($50,000 divided by...
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...
Our Explanation of Income Statement helps you learn the most important features of a corporation's income statement (also known as the statement of operations or profit and loss statement). We provide more understanding...
should a sales tax charged by a supplier for a new office computer be recorded? Select... Computer Equipment Sales Tax Expense Any questions left unanswered will be marked incorrect. Mark the Quick Test as Complete
Right! Natural Wrong. 8. Reporting expenses by categories such as salaries, rent, utilities, etc. is known as the _______________ basis. Functional Wrong. Natural Right! 9. Depreciation expense is reported for a...
to Depreciation Expense and $50,000 will be credited to Accumulated Depreciation. In the second full year of the asset’s life, the amount of depreciation will be $40,000 (4/15 of $150,000). In the third full year...
What is the distinction between debtor and creditor? Definition of Debtor A debtor is a person or enterprise that owes money to another party. The party to whom the money is owed might be a supplier, bank, or other...
What is a lump sum payment? A lump sum payment is often associated with a single amount paid to acquire a group of items. For instance, a corporation might pay $50,000 for the inventory and equipment of a small...
What is a petty cash voucher? Definition of Petty Cash Voucher A petty cash voucher is usually a small form that is used to document a disbursement (payment) from a petty cash fund. Petty cash vouchers are also referred...
What is included in cash and cash equivalents? Examples of Cash In accounting, a company’s cash includes the following: currency and coins checks received from customers but not yet deposited checking accounts petty...
What accounts for the difference in inventory values between periodic LIFO and perpetual LIFO? Difference Between Periodic LIFO and Perpetual LIFO The difference between periodic LIFO and perpetual LIFO involves the time...
If we dispose of an asset, will there be a change in the owner's equity? The owner’s equity of a sole proprietorship will change only if the disposal of an asset causes a gain or loss to be reported on the income...
What is common stock? Definition of Common Stock Common stock refers to the shares of ownership interest in a U.S. corporation. The owners of the common stock are referred to as common stockholders, common shareholders,...
What is leverage? Definition of Leverage In accounting and finance, leverage is the use of a significant amount of debt to purchase an asset, operate a company, acquire another company, etc. Since the cost of debt is...
What is EOQ? Definition of EOQ EOQ is the acronym for economic order quantity. The economic order quantity is the optimum quantity of an item to be purchased at one time in order to minimize the combined annual costs of...
What is treasury stock? Definition of Treasury Stock Treasury stock is usually a corporation’s previously issued shares of common stock that have been purchased from the stockholders, but the corporation has not...
What is NIFO? NIFO is the acronym for next-in, first-out. NIFO is a cost flow assumption, just as FIFO and LIFO are cost flow assumptions. However, NIFO is not acceptable for financial reporting since it calls for a...
How does inflation affect the cost of goods sold? Inflation and the Cost of Goods Sold Generally speaking, a company selling goods during periods of inflation will see an increase in its cost of goods sold. When and by...
Where do credit card payments get recorded? Definition of Credit Card Payments We define a credit card payment as the amount a company remits to the credit card company for the purchases that occurred by using the credit...
What is the meaning of debtor? Definition of Debtor A debtor is a person, company, or other entity that owes money. In other words, the debtor has a debt or legal obligation to pay the amount owed. Example of Debtor If...
What is the difference between financial accounting and management accounting? Definition of Financial Accounting Financial accounting has its focus on the financial statements which are distributed to stockholders,...
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