Accounting 101

Accounting 101 Ivytech Southwest, Finanacial Accounting Class, Final Exam.
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4 forms of buisness entities
 
coorperation, propriatorship, partnership, LLC
difinitions of revenues and expenses
 
revenues: income expenses: cost
FASB
 
Financial Accounting Standard Board
accounting equation
 
assets = liabilities + equity
primary objective of of financial reporting
 
language of business and easy to communicate.
balence sheet lists:
 
assets, liabilities, and owners' equity for the specific date
income satement contains
 
revenues - expenses = net income (for a period of time)
assets are recorded at historical/original cost because
 
it is objective and verifiable
3 activities that businesses engage in
 
operating, invensting, and financing
how do transations affect the accouiting equation?
 
tetter totter balance
left side: and right side:
 
debits, and credits
double-entry accounting system
 
at least 1 debit and 1 credit have to balencew
difference between accounts recievable and accounts payable
 
account receivable is and asset while accouints payable is liability
working capital =
 
current assets - current liabilities
current ratio =
 
current assets / current liabilities
liquidity is
 
how fast it can be turned into cash
which asset is most liquid
 
cash
when is revenue recognized with respect to accrual accounting
 
when its earned
when is revenue recognized with respect to cah basis accounting
 
when you get the cash
when are adjusting entries required
 
when financail statements are prepared at the end of the year
why do we do closing entries
 
fresh start
what is a cash equibalent
 
something that can be converted into cash within 90 days
can a foolproof internal control system be designed
 
no
2/10, n/30
 
2% discount if paid in 10 days otherwise has to be paid in 30 days.
FOB destination and FOB shipping point mean
 
when goods leave dock and revenues are recognized
2 methods for accounting for bad debits are
 
allowance and direct writeoff
calculate net realizable value of accouints recievable
 
accounts recievable - allowance
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