What is the difference between cash flow and free cash flow? Definition of Cash Flow Cash flow refers to the amounts of cash that a company, investment or project generates. The cash that a company generates is different...
What is the difference between cash flow and free cash flow? Definition of Cash Flow Cash flow refers to the amounts of cash that a company, investment or project generates. The cash that a company generates is different...
policies such as how and when revenues are recognized, how property is depreciated, how inventory and income taxes are accounted for, and more. Other disclosures in the notes to the financial statements include the...
should credit revenues when they are earned. 5. In September when the company receives the $2,000 from the customer, which account should the company debit? Cash Right! We always debit Cash when cash is received....
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...
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...
assumption is needed. inventory This current asset reports a retailer’s or manufacturer’s goods on hand at its cost (or lower). Because the unit costs change, a cost flow assumption is needed. Mark as wrong Mark as...
Our Explanation of Evaluating Business Investments compares four of the techniques for reviewing potential capital expenditures. You will be introduced to accounting rate of return, payback, net present value, and...
much of the data entry tasks. This includes entering the bills from vendors, paying bills, processing payroll data, preparing sales invoices, mailing statements to customers, etc. The accountant is likely to have a...
What is an unsecured creditor? Definition of Unsecured Creditor An unsecured creditor is often a vendor or supplier that: Shipped goods to a customer as part of a sale on credit Has not been paid Does not have a lien on...
to the owner’s capital account at the end of each accounting year. Select... True False 3. The closing entries will include a __________ to the Sales account. Select... debit credit 4. Prepaid Insurance is a temporary...
What is inventory? Definition of Inventory Inventory is a very significant current asset for retailers, distributors, and manufacturers. Inventory serves as a buffer between 1) a company’s sales of goods, and 2) its...
is the sum of the following: the days’ sales in inventory (365 days/inventory turnover ratio), plus the average collection period (365 days/accounts receivable turnover ratio) The operating cycle has...
of its customers, the company will credit its current asset account Accounts Receivable for $100 and will debit a contra revenue account such as Sales Returns and Allowances. Join PRO to Track Progress Mark the Question...
to product sales) additional cash payments or cash outflows of $750,000 (for payments related to the product line’s costs and expenses) These cash flows indicate that the net incremental cash flows are expected to be...
will include preparing the following projections for the next accounting year: Amounts for sales Amounts for producing goods Amounts for each department’s expenses Summarizing the above budgets into a master budget or...
(with payment due 30 days later). Company A will record the amount of the sale with a credit to Sales and a debit to Accounts Receivable. Company B will record the purchase (perhaps as inventory) with a credit to...
(or amounts) contained in an appraisal report for a specific property. The appraisal report is generally prepared by a professional appraiser who looks at the property’s features including size, type of construction,...
and Allowances and for Purchase Discounts.) When a company uses the perpetual inventory system, the general ledger account Inventory is continually being updated for all the purchases and sales of goods: The costs of...
the financial statements to be more attractive and easier to read especially when the amounts for each of two or three years must be shown. Example of Rounding Amounts on Financial Statements Imagine looking at a...
. Predicting all of the future cash flows can be difficult especially if the new machine will offer more features that could result in more sales, etc. Obviously, the further into the future you look, the more uncertain...
to the time of the related credit sales. However, for income tax purposes the direct write-off method must be used. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your...
by a company’s general administrative personnel Automobiles used by a company’s top executives Automobiles used by the sales staff will be part of the selling expenses but will be included in the period’s SG&A...
since the goods are not physically present at either the seller’s or the buyer’s location. It is necessary to examine whether the sales terms were FOB shipping point or FOB destination. The rules to be followed are:...
ratio, here are some additional accounting/financial ratios: Quick ratio Debt to equity ratio Accounts receivable turnover ratio Days’ sales in inventory Interest coverage ratio Gross margin ratio Return on...
of $48,000 per year, the person’s semimonthly gross pay will be $2,000 ($48,000/24 pay periods). A person with an annual gross salary of $48,000 who is paid biweekly will have a biweekly gross pay of $1,846...
, such as total credit sales for a day, total collections from customers for a day, total returns and allowances for a day, and the total amount owed by all customers. Hence, if you want to find the amount that a...
account for 70% of the company’s sales. 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 Refresh your...
sales of $4,600 on Saturday, June 29. The retailer deposits the money in the bank’s night depository on Saturday evening. The retailer’s Cash should be debited for $4,600 on June 29. However, the bank statement will...
sales, the company is deciding whether to eliminate E. If E is eliminated, the compensation of E’s employees and other expenses directly associated with E (amounting to $400,000) will be eliminated. However, the...
a contribution margin of $4 per unit (selling price of $10 per unit minus variable expenses of $6 per unit), the company’s break-even point in sales for the year is 75,000 units. Break-even Point in Billable Service...
discount. (A supplier offering the discount will record the discounts taken by its customers in the account Sales Discounts.) Purchase Discounts is also a general ledger account used by a company purchasing inventory...
% minus the company’s normal gross profit percentage. (This should be available from the previous year’s income statements. Multiply the cost of goods sold percentage times the sales since December 31. The result is...
will automatically record most of the business transactions into the general ledger accounts immediately after the software prepares the sales invoices, issues checks to creditors, processes receipts from customers,...
at its cost of $15,000 Report the inventory at its net realizable value (NRV) of $12,000. (NRV is equal to the estimated sales value of $14,000 minus $2,000 of expenses necessary to get the goods sold for $14,000.) The...
will prepare its own sales invoice to bill the condo developer. 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...
that the company’s balance sheet will include the amount as a current liability. (The adjusting entry typically debits Wages Expense and credits Wages Payable.) Example of Wages Payable To illustrate wages payable we...
the following adjusting entry: A debit to Bad Debt Expense that will cause the income statement to report the estimated $10,000 loss closer to the time of the credit sales A credit to Allowance for Doubtful Accounts...
. Examples of Accounts Payable Often a company will send a purchase order to a supplier requesting goods. When the supplier delivers the goods it also issues a sales invoice stating the amount and the credit terms such...
for the current period’s expense that is reported on the company’s income statement. If Provision for Doubtful Debts is the name of the account used for recording the current period’s expense associated with the...
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