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Accounting Test #2
Colon Accounting Test #2 - Lamar University
21
Accounting
Undergraduate 1
03/03/2013

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Cards

Term
what is the formula for working capital?
Definition
Current assets - Current Liabilities
Term
what is the formula for current ratio?
Definition
Current Assets / Current Liabilities.
Term
How do you figure net income percentage?
Definition
Net income / Total Revenue
Term
How do you figure Return on Equity?
Definition
Net income / Average Stockholders Equity
Term
How do you calculate Gross Profit Rate?
Definition
Divide Gross profit by net sales.
Term
How do you record a purchase at net cost?
Definition
Debit Inventory
Credit Accounts Payable
Term
How do you record the loss of a cash discount?
Definition
D.R. Accounts Payable
D.R. Purchase Discounts Lost
Credit - Cash
Term
How do you compute interest?
Definition
Principle X Rate X (x/12)
Term
what is unearned revenue?
Definition
Cash collected in advance of a service that will be performed.
Term
What is the purpose of adjusting entries?
Definition
to make sure that revenues and expenses are properly recorded.
Term
What accounts are affected by adjusting entries?
Definition
Supplies
Prepaid Insurance
Prepaid Rent
Depreciation
Salaries and WAges
Interest
Revenue Earned
Income Taxes
Term
How do you figure out net income?
Definition
Revenues - Expenses
Term
What is the movement of retained earnings?
Definition
Beginning retained earnings balance + Net Income - Dividends = new Retained earnings.
Term
What is the Balance Sheet used for?
Definition
To show assets, liabilities, and stockholders equity at a point in time.
Term
What is the only place dividends appear?
Definition
Statement of Retained Earnings
Term
What accounts are effected in summary statements?
Definition
Revenue, Expense, income summary, dividends
Term
how do you get gross profit?
Definition
Revenue from sales - COGS
Term
COGS under the periodic system?
Definition
Beginning Inventory + purchases of inventory = COGS availbel for sale. Then you subtract ending inventory. COGS.
Term
How do you record purchases to an account?
Definition
Debit - Purchases
Credit Accounts payable
Term
How do you record cash purchases of inventory?
Definition
Debit Purchases
Credit Cash
Term
To record payment with discount.
Definition
Debit Account Payable
Credit Cash
Credit Purchase Discount
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