asset, the business must reduce the amount it reports as working capital (which is current assets minus current liabilities). Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance...
asset, the business must reduce the amount it reports as working capital (which is current assets minus current liabilities). Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance...
arrangement that assures that the long-term debt will be replaced with new long-term debt or with capital stock. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting...
What is a classified balance sheet? Definition of Classified Balance Sheet A classified balance sheet arranges the amounts from a company’s balance sheet accounts into a format that is useful for the readers. For...
What is a budget? A budget is a financial plan for future activities. The budgets used in business often include a sales or revenues budget detailed by products or services, production budgets, budgets for each...
year with a zero balance. The temporary accounts include the income statement accounts (revenue, expense, gain, loss, income summary) and also the drawing account of a sole proprietorship. The balances in these accounts...
capital account will be reduced by the $2,000 loss. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at your current job...
the efficiency or effectiveness of a company’s management. Examples of Turnover Ratios Some of the turnover ratios are: accounts receivable turnover ratio inventory turnover ratio total assets turnover ratio fixed...
a company’s costs, assisting in financial decisions, profit planning, calculating break-even points, capital budgeting, and calculating the costs of existing products in order to value the company’s inventory and to...
for a long-term purpose, it cannot be used to pay its short-term liabilities. Therefore, the sinking fund is not a current asset nor is it part of the corporation’s working capital. Example of Reporting a Sinking Fund...
products and services Analyzing the profitability of product lines, customers, territories, etc. Capital budgeting Ratio analysis Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to...
What is disinvestment? In business, disinvestment means to sell off certain assets such as a manufacturing plant, a division or subsidiary, or product line. Disinvestment is sometimes described as the opposite of capital...
assets in order to determine a company’s working capital. (Dividing current assets by the current liabilities is the company’s current ratio.) Examples of Current Liabilities The following are common examples of...
was required prior to 1988. Generally, the funds flow statement summarized a company’s changes in its working capital from one balance sheet date to another. Example of Cash Flow Statement For an example of the cash...
to as liquidity ratios or short-term solvency ratios since they assist in evaluating a company’s ability to pay its current obligations: Working capital Current ratio Quick ratio Accounts receivable turnover ratio...
, the second account is to the temporary account Rent Expense which will be debited. The debit to Rent Expense also causes owner’s equity (or stockholders’ equity) to decrease. Eventually, the balances in the...
Revenues will eventually be moved to the sole proprietor’s capital account or to a corporation’s Retained Earnings account (thereby increasing the credit balance in one of those owner’s or stockholders’ equity...
property, plant and equipment, it will be reported in the cash flows from investing activities as Capital expenditures….(350,000). The amounts appearing in parenthesis can be thought of as indicating the following:...
capital account) increases. Accountants do prepare an income statement or P&L to report the revenues and expenses, but the ultimate effect of a positive amount of profit or net income is to increase the business’s...
by $1,400,000 of average total assets). This ratio will vary by industry, as some industries are more capital intensive than others. Always compare your company’s financial ratios to the ratios of other companies in...
within stockholders’ equity as part of which category? Select... Paid-in capital Retained earnings Treasury stock View Coaching Paid-in capital reports the amounts that the corporation received at the time the...
's net income will cause a change in which component of stockholders' equity? Accumulated Other Comprehensive Income Wrong. Paid-in Capital Wrong. Retained Earnings Right! 7. Which financial statement's...
to one account entitled __________ Common Stock. 12. Stockholder's equity is subdivided into two major sections: __________ paid-in capital and __________ retained earnings . 13. The net income of a corporation is...
This is another term used for the 1% or 2% sales discount or purchase discount. Mark as wrong Mark as right 1/10, net 30 This invoice term indicates that the net amount (after any return or allowance) is due within...
YTEPT Unscramble PETTY EYPTT Unscramble 13. Inventory is reported as a __________ asset. CURRENT UCRNRTE Unscramble CURRENT ECRTURN Unscramble 14. One section of stockholders' equity is paid-in or contributed...
Expense of $5,000 for 120 months. However, on its U.S. income tax return, the corporation is allowed to depreciate the asset over 7 years at an accelerated rate. Often the income tax regulations (See IRS.gov) allow...
of interest expense is entered on the corporation’s income tax return, its taxable income will decrease by $800,000. If the corporation’s combined federal and state income tax rate on this increment is 40%, the...
flow assumption from FIFO to the LIFO because they were experiencing rising costs. By flowing the recent higher costs into the cost of goods sold on the income statement and tax return (and keeping the older lower costs...
be recorded in the company’s Purchases account. Select... True False 18. A separate account for meals expense is helpful since business meals are expensed in full on the financial statements but may or may not be...
Our Explanation of Depreciation emphasizes what the depreciation amounts on the income statement and balance sheet represent. Learn why depreciation is an estimated expense that does not assist in determining the current...
. The stockholders’ equity section of the balance sheet is divided into several parts: Paid-in (or contributed) capital Retained earnings Accumulated other comprehensive income Treasury stock Stockholders’ equity...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
debts expense are: Allowance method (calculated as: a percentage of sales, or a percentage of accounts receivable) Direct write-off method Which method is required for a U.S. corporation’s financial statements (FS)...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
the medical costs and the lost wages of employees’ work-related injuries and illnesses. Mark as wrong Mark as right W-2 (or) Wage and Tax Statement This IRS form is provided to every employee in January and contains...
the Cash account for $800. Since every entry must have debits equal to credits, the company will need to debit another account for $800. In this case, the account is Rent Expense. (Eventually the debit balance in the...
by the owners plus the company’s earnings that the owners chose not to withdraw as dividends or drawings. Additional Balance Sheet Information The balance sheet classifications allow the reader to easily compute the...
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