Vocabulary
What type of business (Corp, LLc, Partnership, Sole Prop.) is best suited to help a company raise necessary capital to begin production? Hint: You can buy stock in this type of company
Corporation
A 5000 account payable balance is paid off by a company using cash. How is the accounting equation affected? (Assets go up or down and by how much, Liabilities go up or down by how much, etc.)
Assets decrease 5000
Liabilities decrease 5000
Accounts Payable is what type of account? (Hint: A, L, E)
Liability
COGS = 1,300,000
Beg. Merch Inv = 330,000
Ending Merch Inv = 350,000
Find the inventory turnover ratio
3.82
The matching principle determines when to record __________ (expenses or revenues)
Expenses
This concepts requires that a business remain in operation for the foreseeable future.
Going-concern concept
A business renders a service and sends a sales invoice. The customer will pay the business at a later time. At the time the invoice is sent, what would happen to the business's net income? (increase, decrease, stay the same)
Net income will increase
Notes Payable decreases or increases with a debit?
Decreases
If the inventory turnover ratio is 2.14, calculate how many days inventory will be held.
170.56
Expenses, Revenues, Dividends
A company would be using _________ basis accounting if they record revenue when services are performed, even though cash may be received at a later or earlier date.
Accrual basis accounting
A business purchases $200 of supplies on account. Write the journal entry.
Supplies 200
Accounts payable 200
Revenue that the business has collected, but not yet earned is called...
Unearned Revenue
What is the gross profit percentage if...
Sales Revenue = 160,000
Sales Returns and Allowances = 2,000 Sales Discounts = 3,000
COGS = 80,000
48.4%
Write the journal entry showing SALES REVENUE if you sold merchandise inventory to a customer for 9,000 on account... the cost of the merch sold was 5,500.
Accounts Receivable 9000
Sales Revenue 9000
This account has a balance equal to that of the net income immediately before it is closed out.
Income Summary
A business is working on a 6-month project starting on Feb 1st. They will be paid $48,000 when the job is completed. At the end of March, after adjustments have been made, what will the balance of their Accounts receivable be?
Debit of 16,000
If you are debiting the Income Summary account, what type of accounts are you closing?
Expenses
Find the current ratio if...
Current assets= 120,000
Total Assets = 600,000
Current Liability = 90,000
1.33
A company purchased 100 units for $20 each. Later they bought 100 units for $30 each. They then sold 150 units for $45. What is their cost of goods sold if they use LIFO?
4,000
A company decides to ignore a very small error in their inventory balance because it was not significant. This is an example of which principle/concept?
Materiality Concept
A company purchases inventory on account. Later they return $200 of inventory to the manufacturer. What journal entry should be made to show the return of merchandise inventory?
Accounts Payable 200
Inventory 200
Current Asset
What is the debt ratio (%) if...
Assets= 430,000
Liabilities= 123,000
Equity= 298,000
28.60%
A company sell merch inventory to a customer for 9,000 on account for terms 3/15, n/30. Two days later, the company gives a 1,000 sales allowance.
You have to write the journal entry to show the company paying you cash during the discount period.
Cash 7730
Accounts Receivable 7730