Accounting Exam I
Terms
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- Examp[les of Deferred revenue
- unearned revenue, fees, tuition, premiums in advance, mag subscriptions
- Examples of Deferred expenses
- prepaid ins., prepaid advertising, prepaid interest, supplies
- Examples of Accrued revenues
- fees for services that an attorney did for a client-whom bills the atty the end of the period, rent on property rented to others
- Examples of Accrued expenses
- accrued interest on notes receivable, accrued at end of period, accrued utility expenses and taxes
- Classified Balance Sheet: current asset
- Any asset that is expected to be cash/sold/used up within 1 year
- Classified Balance Sheet: fixed assets(long term):
- physical assets that are long term
- Classified Balance Sheet: total assets
- ?????
- Classified Balance Sheet:current liabilities
- liabilites due within 1 year-notes payable and accounts payable are most common types
- Classified Balance Sheet:long term liabilites
- Liabilites due longer than 1 year--assets are used as collateral (mortgage not payable or mortage payble) until debt is paid
- Classified Balance Sheet: total equity
- ????????
- Stockholders equity
- stockholders rights to the assets of the business. Corporation-stockholders equityconsists of captaial stock and retained earnings. the stockholders equity section of the Class.Bal.Sheet reports each of these two financial statement accounts separtely
- CRIME: Elements of internal control:control environment
- the overall attitudes of management and employees concerning internal controls...includes management philosophy and operating style, organizational structure, and personnel policies
- CRIME: Elements of internal control: risk assesment
- Does the business face lots of risks including⬦ competition, customer and employee theft, increased governmental regulation? These must be identified. Then, internal control procedures must be put in place to minimize these risks.
- CRIME: Elements of internal control: control procedures
- are established to minimize risk and ensure that business goals (including the prevention of fraud) will be achieved***Hire competent personnel, separate related duties or operations, implementing proofs and security measures, mandate vacations for all employees.
- CRIME: Elements of internal control: monitoring
- Once internal controls are put in place, they must be monitored to locate weaknesses and improve control effectiveness
- CRIME: Elements of internal control:information and communication
- management needs feedback from employees regarding significant observations as well as new regulatory changes that might affect the business.
- 8. Be able to define cash and cash equivalents and show how they are reported on the balance sheet
- cash equivalents:us tresury bills, notes issued by major corps. and money market funds. companie that have invested excess cash in cash equivalents usually reports "cash and cash equivalents as one amount on the balance sheet.
- state the overall acounting equation
- Liabilites + stock holders equity = Assets
- asset
- resources owned by a business- cash, accounts receivable, inventory, raw materials, investments, property, equipment, intangibles
- liabilities
- anything a company owes to anybody- Bils, money owed to vendors and suppliers, payroll, short term loans, mortgage
- Equity
- capital, any debt owed to business owners- capital stock, retained earnings, repurchased stock
- dividends
- distribution of earning to stock holders, recorded in retained earnings as a deductions
- revenue
- increase in assets from selling products or services- sales(selling products) or fees earned (prodviding service)
- expenses
- cost incurred to earn revenue, always decrease equity- cost of merchandise sod/supplies expenses, rent, wages, uitilities, misc.
- Be able to identify the three types of businesses.
- manufacturer merchandiser service
- Be able to identify the four organizational forms of businesses.
- proprietorship: partnership: corporations: (stockholders) limited liability company: (members)
- Be able to identify the two business emphases (strategies).
- low cost premium pricing
- Be able to identify business stakeholders (internal and external).
- internal: employees/managers external: customer, bank, suppliers, government, CMS
- Be able to identify the three primary business activities and give an example of each.
- Financing investing operating