Module 6:Accounting System
These balance sheet accounts are typically listed in order of liquidity.
What are assets?
The purchase of supplies on account will result in a credit to this account.
What is accounts payable?
A sale on account will result in a credit to sales revenue and a debit to this account.
Party primarily responsible for the information in the financial statements and disclosures.
Who is Management or Managers? OR Who are the CEO and CFO?
Journal entries are posted to their respective _____ _______ accounts to maintain the balances of each account.
What is the General Ledger?
Amount of stock issuance in excess of par value is recorded to this account.
What is Additional Paid-in Capital?
Accounting principle that determines when revenues are recorded.
What is the Revenue Recognition Principle?
This fixed asset contra-account reduces the ending cost balance of property and equipment on the balance sheet.
What is Accumulated Depreciation?
The Gross Profit Percentage is computed by dividing Gross Profit by this number.
What is Net Sales?
The payment of an expense for a service or benefit to be received in the future will result in a debit to this type of account.
What is a Prepaid Expense or Deferred Expense?
Cash from stock issuances is reflected in this section of the Statement of Cash Flows.
What is Financing?
Cycle that begins when a company receives goods to sell and ends when cash is received from the customer.
What is the Operating Cycle?
Expenses incurred but not paid are credited to this type of account.
What is a Payable or Accrued Expense?
The last adjusting journal entry calculated (after pre-tax income is calculated) at the end of the accounting period is recorded to this expense account.
What is Income Tax Expense?
Net Income/Weighted Average # of shares of Common Stock outstanding equals this ratio
What is Earnings Per Share?
A useful tool used to simulate a general ledger account to summarize transaction effects.
What is a T-Account?
This Income Statement expense line is always listed as its own line item before totalling net income/loss.
What is income tax expense or provision for income taxes?
These accounts are closed at the end of the accounting period and start with a zero balance at the beginning of the new accounting period.
What are Temporary Accounts or Income Statement Accounts?
While the various financial statements provide important information, users must refer to this required integral section for additional details.
What are the Notes to Financial Statements or Financial Statement Footnotes?
Report filed with the SEC to disclose any material event not previously reported that is important to investors (e.g. auditor changes, mergers).
What is a Form 8-K?
A concept relating to financial statement reporting that allows the user to assume that a business will continue operating into the foreseeable future.
What is the going concern assumption?
The denominator in the net profit margin ratio.
What is Net Sales or Operating Revenue?
The name for the ratio Net Sales/Average Total Assets.
What is the Asset Turnover Ratio?
The section of the Annual Report of a public company that presents managements' views on the causes of its successes and failures during the reporting period and the risks it faces in the future.
What is the MD&A or Management Discussion and Analysis?
Year the Securities and Exchange Act was signed into law resulting in the formation of the Securities and Exchange Commission.
What is 1934?