of the sale, the company can experience a temporary or even permanent cash flow problem. In order for the company to minimize these potential problems, a company is wise to routinely review an aging of accounts...
of the sale, the company can experience a temporary or even permanent cash flow problem. In order for the company to minimize these potential problems, a company is wise to routinely review an aging of accounts...
of the sale. In order to know the asset’s book value at the time of the sale, the depreciation expense for the asset must be recorded right up to the date that the asset is sold. If the cash received is greater than...
shares of common stock the number of issued and outstanding shares will increase. This increase will cause the previous stockholders’ ownership percentage to be reduced. Definition of Debt Financing Debt financing...
, there will be an occasional 53-week year) School districts typically have fiscal years of July 1 through June 30 to coincide with its natural business year. Large retailers often end their fiscal years on the Saturday...
The chart of accounts is likely arranged in the same order as the general ledger. That is, the balance sheet accounts are listed first, followed by the income statement accounts. A large corporation’s chart of...
times Mary should have some combination of cash and petty cash vouchers (receipts) that are equal to $100. Next, let’s assume that there is only $20.00 in cash remaining and Mary realizes that $20 is not sufficient....
since it will increase when the ovens must operate for a longer time in order to produce additional loaves of bread. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your...
Why are the amounts on the financial statements rounded to thousands or millions? Definition of Rounding Amounts on Financial Statements Rounding the amounts on a company’s financial statements means dropping the less...
statements as of December 31 will not be reporting the $2,000 of interest (one-third of the $6,000) that the company has incurred in December. In order for the financial statements to be correct on the accrual basis of...
to the health insurance company. Then in account 4211 they can see the portion of the cost that was paid by the employees. The company’s income statement will report the combination of the amounts in accounts 4210 and...
outflows for each option. Since these cash flows will occur at different times, you must “discount” the future cash flows to a present value. (This is necessary in order to recognize the time value of money.) The...
can be converted to cash much faster than inventory. The nature of the company’s sales and how customers pay. If a company has very consistent sales via the Internet and its customers pay with credit cards at the time...
= the cost of goods sold of $440,000. When there is inflation, the retailer must also elect a cost flow assumption in order to determine the cost of the ending inventory, which of course is a factor in the calculation...
pertains to one or more future accounting periods. To illustrate, assume that on December 1, a company recorded its $2,400 payment for six months of property insurance for December through May. At December 31, one month...
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 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 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.
, and the resulting net income. This is sometimes referred to as the P&L. Mark as wrong Mark as right statement of activities This financial statement of a nonprofit organization reports its revenues and expenses in...
Break-even Point (Flashcards) Download Single-Sided PDF Download Double-Sided PDF All Cards (34) Marked Wrong (0) Marked Right (0) break-even point This is the number of units or the revenues needed by a company in order...
What is a bookkeeper? Definition of Bookkeeper A bookkeeper is usually employed by a small to mid-size company (or other organization) to process and record the large volume of transactions involving sales, purchases,...
, let’s assume that the amount is $100. One person is designated as the petty cash custodian. This person is responsible for disbursing the small amounts and for documenting each payment with a petty cash receipt....
$100,000 in mid-December but allows the customer to pay in January. ABCO’s net income is increased in December, but its Cash account will not increase until January. Next assume that ABCO acquires extensive electronic...
website for $70,000. The terms require a payment of $30,000 at the time the contract is signed and $40,000 at the end of the project, which is estimated to take 60 days. The company agrees to begin working on the...
Our Explanation of Future Value of a Single Amount will show you the power of compounded interest on a single deposit. You will see how the future value tables can be useful as well as the rule of 72.
the account balances prior to issuing financial statements in order to comply with the accrual method of accounting as well as other accounting principles and standards. Issuing financial statements to a variety of...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...
and Allowances, another example of a contra revenue account is Sales Discounts (or Early Payment Discounts). 16. What balance would you expect in a contra owner’s equity account such as Owner’s Draws? Select......
as a __________ balance in the account Notes Payable. Select... debit credit 14. When a company makes a principal payment on its bank loan, a __________ should be recorded in its account Notes Payable. Select... debit...
Our Explanation of Adjusting Entries gives you a process and an understanding of how to make the adjusting entries in order to have an accurate balance sheet and income statement. Eight examples including T-accounts for...
Our Explanation of Accounts Receivable and Bad Debts Expense helps you understand the accounting for the losses associated with selling goods and providing services on credit. You will understand the impact on the...
time making the component. On the other hand, if your plant is operating at full capacity, you would have to forego the profit on some items presently being produced (an opportunity cost) in order to make the...
costs. To avoid the death spiral, some companies attempt to allocate overhead costs based on activities and product complexities rather than simply spreading them on production machine hours. Also, some companies do not...
What is the difference between adjusting entries and closing entries? Definition of Adjusting Entries Adjusting entries are made at the end of the accounting period (but prior to preparing the financial statements) in...
whether or not the company expands into ten additional states, the management’s compensation is irrelevant to the decision of whether to expand or not. Therefore, the management’s compensation can be excluded from...
of a T-account. Debit Right! Credit Wrong. 4. A listing of the balances in the accounts in order to determine whether the total amount of debits is equal to the total amount of credits is a __________ trial balance. 5....
in order to replace the units sold. The use of historical costs during periods of increasing prices means that companies with large amounts of plant assets and inventory will be reporting net income that is greater than...
Why does a cost system developed for inventory valuation distort product cost information? The cost system for inventory valuation may have been developed to provide a reasonable total cost of inventory and a reasonable...
for $900,000. As a result, its Sales account was credited for $900,000 and Accounts Receivable was debited for $900,000. Several customers were disappointed in the goods they received and the company gave them a sales...
Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...
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