What are the required financial statements? The required financial statements for U.S. business corporations are: Statement of income. This financial statement is also known as the statement of operations, statement of...
What are the required financial statements? The required financial statements for U.S. business corporations are: Statement of income. This financial statement is also known as the statement of operations, statement of...
and credit side, or left and right side, the balance in a general ledger account will be either a debit balance or a credit balance. Within the general ledger, these accounts are expected to have debit balances: assets,...
be the case under the allowance method. [The Internal Revenue Service requires the direct write off method in order to prevent taxpayers from claiming a bad debts expenses based on an anticipated potential loss.] Join...
include an additional amount that is added to the retailer’s cost of the product. This additional amount must be sufficient to cover the retailer’s selling, general and administrative expenses and some profit....
manufacturing costs. In addition, there are selling, general and administrative expenses that are even more difficult to associate with individual products. A more compelling reason that selling prices should not be...
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...
in accounts receivable, inventory, accounts payable, and most other current assets and current liabilities. The direct method for reporting the cash from operating activities lists the following: the amounts collected...
and expenses under the accrual basis of accounting). A company’s significant cash flows are reported in the statement of cash flows, which is organized as follows: Cash flows from operating activities Cash flows from...
revenues with a limited amount of expenses. In short, the financial statements provide only some of the information needed when attempting to determine the value of a business. Join PRO to Track Progress Mark the...
), and Income statement accounts (revenues, expenses, gains, losses) Under the double entry system of accounting and bookkeeping, every business transaction will affect two (or more) general ledger accounts. In addition,...
, withdraws $2,000 each month for the owner’s household expenses. The company’s entry to record each month’s draws will be: A debit to R. Smith, Drawing (an owner’s equity account with a debit balance) A credit...
, if supplies expense was budgeted to be $30,000 but the actual supplies expense ends up being $28,000, the $2,000 variance is favorable because having fewer expenses than were budgeted was good for the company’s...
be reported on the balance sheet as part of a current liability description such as accrued compensation, accrued payroll liabilities, accrued expenses, accrued liabilities, etc. Join PRO to Track Progress Mark the...
Temporary accounts include all of the various groups of income statement accounts: Revenues Expenses Gains Losses Having temporary income statement accounts makes for easy reporting of each year’s details. After the...
, the company’s Marketing Consultants Expense will be the account that is understated by $20,000. As a result of the $20,000 understatement, the company’s income statement will report too little of SG&A expenses,...
What is accrued payroll? Definition of Accrued Payroll Accrued payroll includes wages, salaries, commissions, bonuses, and other payroll related expenses that have been earned by a company’s employees, but have not yet...
Our Explanation of Working Capital and Liquidity provides you with an in-depth look at the components of working capital and the challenges of converting current assets to cash before obligations come due. You will see...
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...
Our Explanation of Accounts Payable provides insights on the bill paying process in a large company. Included are discussions of the three-way match, early payment discounts, end of period accruals, and more.
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...
by $4,000. Since both sides of the accounting equation increase by $4,000, the accounting equation remains in balance: Expenses Decrease Owner’s Equity and Affects Another Account Owner’s equity will decrease when a...
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...
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...
that revenues and assets are reported when they are earned (not when cash is received) and expenses, losses, and liabilities are reported when the transactions occur (not when cash is paid out). Example 2. A contractor...
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...
the income statement reports revenues earned (not cash receipts) and expenses incurred (not cash payments). Since many investors and financial analysts believe that “cash is king” the annual cash flow statement is...
, vehicles, etc. Liabilities Liabilities are the obligations that a corporation owes as of the final moment of the date shown in the heading of the balance sheet. Examples of liabilities include accounts payable, loans...
Our Explanation of Financial Statements provides you with the highlights of each of the five external financial statements issued by U.S. corporations. Our insights will give you a good understanding of what the...
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.
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...
by $50,000 during the year and revenues amounted to $125,000, what were the expenses for the year? Select... $75,000.00 $175,000.00 29. During the year a sole proprietorship’s assets increased by $25,000 while its...
__________. Select... cost of goods sold selling expenses 12. The Allowance for Doubtful Accounts is one of the accounts under the __________ section of the chart of accounts. 13. The end-of-year balances in the asset...
, perhaps on the 20th day of the month (for electricity used through the 15th day of the month). The cost of the electricity used during the last half of the month must get into the accounting records through an...
. Of course we had to estimate utilities and supplies used during the seven-day period, but we also had to estimate those expenses when we prepared monthly financial statements. Not only did we adopt weekly financial...
of accounting, net income is based on the following: revenues earned during the accounting period (not in the period when the money is received) minus the expenses incurred in the accounting period (not in the period...
account and its bank statement is documented in the __________ reconciliation of the bank statement. 15. Accrued expenses are likely to pertain to transactions that have __________ been paid. Already Wrong. Not Yet...
on December 31, the plumbing company will need an accrual adjusting entry so that its financial statements will report the revenues and the receivables that were earned in December. Deferrals Deferrals or deferral...
volume cannot support its administrative expenses. The death spiral is also known as the downward demand spiral. Example of Death Spiral Assume that a company manufactures a wide variety of products that require...
.) A retailer’s or a manufacturer’s cost of goods sold is another example of an expense that is matched with sales through a cause and effect relationship. Not all costs and expenses have a cause and effect...
Investment center 16. Responsible for revenues and expenses, but not investments. Select... Cost center Revenue center Profit center Investment center 17. Often a department or part of a department. Select... Cost...
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