77 Multiple choice questions
system principle that prescribes an accounting system be able to adapt
to changes in the company, its operations, and needs of decision makers.
system principles that prescribes an accounting system to conform with a
company's activities, personnel, and structure.
for Free On Board; the point when ownership of goods passes to the
buyer; FOB shipping point (or factory) means the buyer pays shipping
costs and accepts ownership of goods when the seller transfers goods to
carrier; FOB destination means the seller pays shipping costs and buyer
accepts ownership of goods at the buyer's place of business.
- Approach to inputting data from source documents as the information is available.
- Information system principle prescribing that its reports be useful, understandable, timely, and pertinent for decision making.
- Notification that the sender has debited the recipient's account in the sender's records.
- Income statement format that include cost of goods sold as an expense and shows only one subtotal for total expenses.
- Linkage giving different users and different computer access to common databases and programs.
policies and procedures used to protect assets, ensure reliable
accounting, promote efficient operations, and urge adherence to company
records, and methods that collect and process data from transactions
and events, organize them in useful forms, and communicate results to
basic components of accounting systems are source documents, input
devices, informational processors, information storage, and output
- Net sales minus cost of goods sold; also called gross margin.
- Goods a company owns and expects to sell in it's normal operations.
of times a company's average inventory is sold during a period;
computed by dividing cost of goods sold by average inventory; also
called merchandise inventory.
- Another name for a cash disbursement journal when the journal has a column for check numbers.
- Any journal used recording and posting transactions of a similar type.
- Catalog (full) price of an item before any trade discount is deducted.
- Notification that the sender has credited the recipient's account in the senders' records
- Gross margin (net sales minus cost of goods sold) divided by net sales; also called gross profit ratio.
- Information outside the usual accounting records, also called supplemental records.
- Journal normally used to record all purchases on credit.
- Description of the amounts and timing of payment that a buyer (debtor) agrees to make in the future.
- Financial statements covering periods of less than one year; usually based on one-, three-, or six-month periods.
to assign cost to inventory when the purchase cost of each item in
inventory is identified and used to compute cost of inventory.
- Intermediary that buys products from manufacturers or whole-salers and sells them to consumers.
- Method to estimate ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods at retail.
of number of days needed to convert inventory into receivables or cash;
equals ending inventory divided by cost of goods sold and then
multiplied by 360*; also called days' stock on hand.
- Plan that shows predicted operating expenses not included in the selling expenses budget.
to assign inventory cost to sales; the cost of available-for-sale units
is divided by the number of units available to determine per unit cost
prior to each sale that is then multiplied by the units sold to yield
the cost of that sale.
- See Gross Profit; Net Sales minus cost of goods sold; also called gross margin.
used to assess a company's ability to settle its current debts with its
most liquid assets; defined as quick assets (cash, short-term
investments, and current receivables) divided by current liabilities.
- Special journal normally used to record all payments of cash; also called cash payments journal.
- Time period that can pass before a customer's payment is due.
- Means by which information is taken out of the accounting system and made available for use.
- Required method to report inventory at market replacement cost when that market cost is lower than recorded cost.
- Accumulating source documents for a period of time and then processing them all at once such as once a day, week, or month.
- Term used by a seller to describe a cash discount granted to buyer who pays within the discount period.
- Journal with more than one column
- Abbreviation for End Of Month; used to describe credit terms for credit transactions.
- Method to assign cost to inventory that assumes items are sold in the order acquired; earliest items purchased are sold first.
- Programs that manage a company's vital operations, which range from order taking to production to accounting.
- Component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.
statement format that shows subtotals between sales and net income,
categorizes expenses, and often reports the details of net sales and
to estimate inventory when the past gross profit rate is used to
estimate cost of goods sold, which is then subtracted from the cost of
goods available for sale.
system principle that prescribes the benefits from an activity in an
accounting system to outweigh the costs of that activity.
- Component of an accounting system that keeps data in a form accessible to information processors.
that records the cost of inventory purchased but does not continuously
track the quantity available or sold to customers; records are updated
at the end of each period to reflect the physical count and costs of
- See Merchandise; Goods that a company owns and expects to sell to customer; also called merchandise or inventory.
- List of the balances of all accounts in the accounts payable ledger and their totals.
- General ledger account, the balance of which (after posting) equals the sum of the balances in its related subsidiary ledger.
- Time period in which a cash discount is available and the buyer can make a reduced payment.
- Expected selling price (value) of an item minus the cost of making the sale.
- All-purpose journal for recording the debits and credits of transactions and events.
- Journal normally used to record sales of goods on credit.
- Special journal normally used to record all receipt's of cash.
- Reduction from a list or catalog price that can vary for wholesalers, retailers, and consumers.
- Means of capturing information from source documents that enables its transfer to information processors.
- Expenses of promoting sales, such as displaying and advertising merchandise, making sales, and delivering goods to customers.
- Term used by the purchaser to describe a cash discount granted to the purchaser for paying within the discount period.
- Subsidiary ledger listing individual creditor (supplier) accounts.
- See Merchandise Inventory; Goods that a company owns and expects to sell to customer; also called merchandise or inventory.
- List of the balances of all accounts in the accounts receivable ledger and their totals.
- Entity that earns net income by buying and selling merchandise.
- Owner of goods who ships them to another party who will sell them for the owner.
- Segment operating income divided by segment average (identifiable) assets for the period.
that prescribes use of the same accounting method(s) over time so that
financial statements are comparable across periods.
- Inventory losses that occurs as a result of theft or deterioration.
- Subsidiary ledger listing individuals customer accounts.
- Cost of inventory sold to customers during a period; also called cost of sales.
- Intermediary that buys products from manufacturers or other wholesalers and sells them to retailers or other wholesalers.
- Receiver of goods owned by another who holds them for purposes of selling them for the owner.
to assign cost to inventory that assumes costs for the most recent
items purchased are sold first and charged to cost of goods sold.
- Principle that prescribes the less optimistic estimate when two estimates are about equally likely.
system principle that prescribes an accounting system to aid manager in
controlling and monitoring business activities.
Weighted Average. Method to assign inventory cost to sales; the cost of
available-for-sale units is divided by the number of units available to
determine per unit cost prior to each sale that is then multiplied by
the units sold to yield the cost of the sale.
- List of individual sub-accounts and amounts with a common characteristic; linked to a controlling account in the general ledger.
- Reduction in the price of merchandise granted by a seller to a buyer when payment is made within the discount period.