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Terms in this set (30)
When are current liabilities due?
within one year
What account is affected when a company gets a note?
increase in cash and increase in notes payable
How is sales tax recorded by a retailer?
increasing sales tax payable
What is a sustainable income?
best indicator of a business's future performance
What is the title for 'sustainable income' on the income statement?
income from continuing operations
Where would gains or losses on disposal of a discontinued operations be shown on the income statement?
after income from operations
If a company has low quality of earnings, what might they do to boost their earnings?
They may capitalize and then depreciate their equipment repair costs
Another name for vertical analysis
common size analysis
Another name for horizontal analysis
Why are ratios used?
to identify relationships
What ratio would creditors be interested in?
What business has a high turnover rate?
Why is the horizontal analysis used?
to determine the increase or decrease that has taken place, expressed as either an amount or percentage.
Who uses managerial accounting information?
How often to management accountants provide reports to their users?
What activities and responsibilities are associated with management's functions
planning, controlling, directing
In a manufacturing setting, if a factory employee is involved in manufacturing the product, what type of labor is this?
What are manufacturing costs?
Direct Materials, Direct Labor, Manufacturing overhead
How would raw materials available to be used be calculated?
Beginning Raw Materials + Purchases = Raw Materials Used
The most likely level of income to be obtained in the future-- that is, to extent this year's net income is a good predictor of future years' net income is...
discontinued operations should be shown in the income statement as
net of tax
What affects quality of earnings?
alternative accounting methods, pro forma income, improper recognition
Comparisons with other companies to provide insight into a company's competitive position is...
What are Liabilities?
Creditors claim on total assets, existing debts & obligations, obligations that must be settled or paid at some time in the future by the transfer of assets or services.
When recording payroll...
Payroll deductions are recorded as liabilities
Notes payable provide the lender...?
Both written documentation and interest income
If given $100 and the sales tax rate is 10%, how much of the $100 is sales?
How much is sales tax?
100 / 1.10 = $90.91
100 - 90.91 = $9.09
If a retailer receives $10.50, of which $.50 is for sales tax, how much would the sale be recorded?
Increase cash $10.50, Increase sales tax payable $.50, and increase sales $10.
If a $500, 10% note is issued on October 1, what is the entry needed to prepare the December financial statements? The note is due March 31.
( 3/12 x 10% ) x 500 = $12.50
On March 31, the note above is paid off. Assume that interest was accrued to March 31, record the pay off of the note & interest on March 31.
A = L + SE
Cash NP Interest Payable Interest Exp
------ ---- ------------------ -------------
-525 -500 +12.50 -12.50
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