Card Set Information
Accounting Exam 3 Material
Refers to the procedures designed to ensure that the company is managed in the interests of the shareholders.
Unqualified (clean) Audit Opinion
is an auditors statement that the financial statements are prensentations in all material respects in conformity with GAAP.
Can influence a desicion; it is timely and has predictive and/or feedback value.
is accurate, unbiased and verifiable.
Can be compared over time because similar accounting methods have been applied.
allows comparisons across business because similar accounting methods have been applied.
suggests that care should be taken not to overstate assets and revenues and understate liablities and expenses.
8-K Any material event
Additional Paid-In Capital
(Paid-in Capital, Contributed Capital in excess of Par) is the amount of Contributed Capital less the Par value of the stock.
is Net Sales less cost of goods sold.
Income from Operations
equals Net Sales less cost of goods sold and other operating expenses.
Income Before Taxes
is revenues minus all expenses except income tax expense.
Return on Assets
Net Income / Average Total Assets
Credit Card Discount
is the fee charged by the credit card company for its services.
(cash discount) is a cash discount offered to encourage prompt payment of an account receivable.
Sales Returns and Allowances
is a reduction of sales revenues for return of or allowances for unsatisfactory goods.
Gross Profit Percentage
Gross Profit / Net Sales
bases bad debt expense on an estimate of uncollectible accounts
Bad Debt Expense
is the expense associated with estimated uncollectible accounts receivable.
Allowance for Doubtful Accounts
is a contra-asset account containing the estimated uncollectible accounts receivable.
Percentage of Credit Sales Method
bases bad debt expense on the historical percentage of credit sales that result in bad debts.
Aging of Accounts Receivable Method
estimates uncollectible accounts based on the age of each account receivable.
Receivables Turnover Ratio
Net Sales / Average Net Trade Accounts Receivable
Average Collection Period = 365 / Receivables Turnover
are short-term investments with original maturities of three months or less that are readily convertible to cash a whose value is unlikely to change.