Multi-Step Income Statement
Classified Balance Sheet
Entering Analysis
Closing Thoughts
Other Stuff
100
The first two sections of the multiple-step Income Statement that we learned to prepare in chapters 10 and 11.
What are the Net Sales and Cost of Goods Sold sections?
100
The difference between a non-classifed and a classified Balance Sheet.
What is adding sub total categories for specific asset and liability categories?
100
Banks make credit decisions, managers make management decisions, investors make investment decisions base on this analysis.
Why do we need to pay attention to this financia statement stuff? (The raw numbers don't tell the whole story)
100
The reason this process should be largely a review.
What is because you learned it in Accounting I and it is not much different?
100
The only difference in the Statement of Owner's Equity as we learned it in Accounting I.
What is just adding another line showing any additional owner investment in the business?
200
The reason that Net Sales, Cost of Goods Sold, and Gross Profit totals are shown in a separate column.
What is to highlight the most relevant amount totals?
200
Where to categorize Land, Buildings and Equipment?
What is Property, Plant, and Equipment? (DUH)
200
The amount a business would have to work with if it compared the value of its current assets to the amount of its current liabilities.
What is working capital?
200
This accounts for the fact that the debit and credit columns in the Income Statement column of the worksheet have more accounts than in Accounting I. ***Daily Double***
What are the additional contra revenue accounts for sales discounts and sales returns & allowances , and the contra expense accounts for purchase returns & allowances and purchase discounts?
200
The reason that asset deprecition over a period of time is called Accumulated Depreciation.
What is because it accumulates (adds up over time)? (DUH)
300
A significant amount on the multi-step income statement that indicates how successfully the company is performing in its primary business operations. ***Daily Double***
What is Income from Operations (Operating Income)?
300
The purpose of the depreciation account.
What is to reflect the "using up" of assets lasting for more than 1 year?
300
The expression of a company's total current asset value to its total current liabilities in terms of a ratio of one to the other.
What is the current ratio? (C/A divided by/ C/L)
300
The third closing enrty accomplishes this process.
What is it actually records the company's profit or loss in the owner's capital account?
300
Refers to the speed with which a company can convert an asset to cash. (sell it, collect it, etc.)
What is liquidity?
400
The two subcategories that operating expenses (those expenses related to the company's primary business activity) are sometimes divided.
What are Selling Expenses and General and Administrative Expenses?
400
The term for an asset's cost less its accumulated depreciation.
What is Book Value?
400
Beginning balance + ending balance divided by 2. ***Daily Double***
What is the calculation of average values as used in the inventory and accounts receivable turnover calculations?
400
These types of accounts should have a zero balance after closing leaving only permanent balance sheet accounts with balances.
What are temporary (nominal) accounts?
400
Where to find for your test the more specific definitions for current assets and liabilities than basically using 1 year as the measure.
What is look it up in your notes? (They should already be there)
500
Where income for a retail clothing store that collected rent for a prior store location they no longer use would be reported on the multi-step Income Statement.
What is Other Revenues (Income)?
500
The length of time generally required for a business to buy inventory, sell it. and collect the cash.
What is operating cycle?
500
This results from relating inventory and accounts receivable turnover calculations to the number of days in a year.
What is average days in inventory and average days to collect receivables?
500
This final step in the closing process is to insure the books are in balance when starting the next accounting period.
What is a post closing trial balance?
500
Optional journal entries involving adjusting entries sometimes used to simplfy recording certain transactions in the new accounting period.
What are reversing entries?
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