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Expenditure Process
Conversion Process
Risk
Return
Random
100
determine ending inventory at the end of the period
What is Periodic inventory system
100
1st conversion process activity
What is Direct materials inventory
100
chance of an unfavorable outcome
What is Risk
100
interest on principal only
What is Simple interest
100
Assets = Liabilities + Owners' Equity
What is Accounting Equation
200
determine ending inventory continuously
What is Perpetual inventory system
200
2nd conversion process activity
What is Work-in-process inventory
200
risk of changing price levels
What is Inflation risk
200
interest on principal plus interest
What is Compound interest
200
increases assets
What is debit
300
inventory purchased to be resold
What is Merchandising
300
3rd conversion process activity
What is Finished goods inventory
300
risk that the particular company will not remain in business
What is Business risk
300
return of the initial amount invested
What is Return of investment
300
% debt * debt rate + % equity * equity rate
What is Weighted average cost of capital
400
inventory purchased to be used in production
What is Manufacturing
400
$2,500 of indirect materials were issued into production
What is Manufacturing overhead?
400
risk that the investment cannot be converted to cash when desired
What is Liquidity risk
400
additional amount returned in excess of (or less than) the amount invested
What is Return on investment
400
increases owners' equity
What is Credit
500
purchases and returns of inventory are recorded at their net-of discount amounts, discounts LOST are recorded separately
What is Net price method
500
Products started, but not completed
What is Work-in-process inventory
500
expected rate of return adjusted for inflation, business, and liquidity risk
What is Risk premium
500
estimated, before the fact, rate of return; the amount the investor thinks will be returned
What is Expected rate of return
500
the process of recording an entire accounting event in the journal
What is Journalizing