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Definition
| An accounting time period that is one year long |
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| an accounting time period that starts on Jan 1st and ends Dec 31st |
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| Revenue Recognition Principle |
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Definition
| dictates that revenue be recognized in the accounting period in which it is earned(when the service has been provided or when the goods are delivered) |
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| requires that expenses be recorded in the same period in which the revenues they helped produce are recorded. EXPENSES RECORDED ONLY WHEN INCURRED. |
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| recorded to the ledger/incorporated into the financial statements |
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| what we paid for something. also, a GAAP |
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| what our initial historical cost was net of any depreciation or other adjustments since the date acquired |
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| Valuation(of assets and liabilities) |
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Definition
| B/c assets and liabilities are "probable", we introduce "estimation" to properly record an asset or liability at its properly measured amount |
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| Does Accrual or Cash Basis of Accounting adhere to GAAP? |
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Definition
| Accrual Basis of Accounting |
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Definition
| Payments of cash that are recorded as assets before they are used or consumed |
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| receipt of cash that is recorded as a liability because the revenue has not been earned |
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| revenues earned but not yet received in cash |
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| Expenses incurred but not yet paid in cash |
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| Allocating the cost of an asset to expense over its useful life. ESTIMATION. NOT VALUATION either. |
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Definition
| An offset against an asset account on the balance sheet. (ex. Accumulated Depreciation) |
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| Salaries paid for after the service has been performed |
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Definition
| transfer the temporary account balances to the stockholders' equity account and reduce the balances in the temporary accounts to zero. |
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Term
| Temporary Accounts include... |
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Definition
| All revenue and expense accounts, and Dividends |
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Term
| Perpetual Inventory system |
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Definition
| A detailed inventory system in which a company maintains the cost of each inventory item and the records continuously show the inventory that should be on hand |
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| Periodic Inventory system |
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Definition
| An inventory system in which a company does not maintain detailed records of goods on hand and determines the cost of goods sold only at the end of an accounting period |
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Term
| Purchase of merchandise is recorded when goods are _____________, and is called _____________ before the count is made and ________________ after. |
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Definition
| Received from Seller, Purchases, Inventory |
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Term
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Definition
| includes all purchases of merchandise for RE-SALE to customers and costs to get it to the business AND make ready for sale. |
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Definition
| A return of the goods from the buyer or seller for cash or credit |
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Definition
| A reduction made in the selling price of the merchandise, granted by the seller so that the buyer will keep the goods. |
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Definition
| A cash discount claimed by a buyer for prompt payment of a balance due |
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Definition
| An account that is off-set against a revenue account on the income statement. (Ex. Sales Returns, Sales Discounts, Sales Allowances) |
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Definition
| A reduction given by a seller for prompt payment of a credit sale |
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Term
| Sales Returns and Allowances |
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Definition
| Transactions in which the seller either accepts goods back from the purchaser( a return) or grants a reduction in the purchase price(an allowance) so that the buyer will keep the goods. |
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Definition
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Term
| Reasons for Gross Profit Rate Change |
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Definition
1. Selling products with a lower "mark-up"
2. Increased competition can lower sale prices
3. Paying higher prices to suppliers
4. Sales Mix |
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Term
| Profit Margin Ratio/What can alter this?? |
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Definition
Net Income/ Net Sales
(Percentage of "mark-up" on merchandise sold) |
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Term
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Definition
| Interest=principal(p) x rate(i) x time(n) |
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Term
| Future Value of a single amount equation |
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Definition
| Future Value(FV)= p x (1 + i)^n |
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Term
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Definition
| A series of equal dollar amounts to be paid or received periodically |
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| Present Value of a Single Amount |
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Definition
| Present Value=Future Value/ (1+i)^n |
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Definition
| today's value of money to be received in the future |
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| Value of an amount known today which will be received/ paid in the future |
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| Interest earning interest. Compounding period should be stated, generally compounds monthly. |
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Definition
| Frequency of annuity payments |
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| Payments made at the end of the payment interval |
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| payments made at the beginning of the payment interval |
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Definition
| Present Value of Interest + Present Value of Principle |
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Term
| Accrued Revenue is a/an... |
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Definition
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Term
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Definition
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Term
| In regard to Purchase Discounts, if the invoice is paid within the discount period, then the amount of the discount decreases ______________ |
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Definition
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