accounting test 2

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accounting test 2
2013-03-12 01:13:02

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  1. how many quarters are there in a year?
  2. What is the purpose of the fiscal year?
    provide feedback on how well a business is doing
  3. Fiscal years coincide with?
    calander time
  4. Revenue recognition
    revenue recognized in the period it is earned
  5. Matching principle
    expenses matched with revenue
  6. cash basis revenue
    revenue recognized when cash is received
  7. cash basis expenses
    expenses recognized when cash is received
  8. accrual basis
    need to adjust balances at the end of accounting period to ensure that revenue recognition and matching principles are followed
  9. The steps for adjusting entries:
    • 1. Identify original entries
    • 2. determine the balances
    • 3. make the adjustments to correct balances
  10. prepayments
    expenses or revenues recieved/paid in advance
  11. debits and credits for accumulated and depreciation expense
    • depreciation expense- debit
    • accumulated depreciation- credit
  12. accurals
    expenses/revenues owed but not due till a future period!
  13. accrued expense
  14. permanent accounts
    • Assets
    • liabilities
    • common stock
    • retained earnings
  15. Temporary accounts
    • Revenues
    • Expenses¬†
    • Dividends
  16. shrinkage
    people stealing, damaged goods, etc
  17. Perpetual
    • M/I account increased when inventory purchased.
    • M/I decreased when inventory sold
  18. perpetual inventory
    merchandise inventory account always shows the amount of inventory on hand
  19. periodic inventory
    amount of inventory on hand must be determined by taking a physical count
  20. take a physical inventory check at the end of the year?
    yes because of shrinkage!
  21. Merchandise inventory
    • Debit-purchases/freight costs
    • credit-sold,discounts, returns
  22. Net sales
    Sales - (SRA+SD)
  23. Gross profit
  24. Income from operations
    GP-operating expense
  25. Net income
    GP-Operating Expense+other revenue and gains-Other expenses-income tax expense
  26. Gross profit rate
  27. Profit Margin Ratio
    Net Income/ Net sales
  28. overstated/understated
    • R-E=N/I
    • A=L+SE
  29. Prepayments deal with?
  30. Accruals deal with
    No cash but earnings
  31. when paying balances you...
    debit cash and credit a/p and m/i
  32. when selling or receiving money... you do?
    Debit cash and credit S/D and A/R