Chapter 3 Flashcards
What are the types of Revenue Accounts?
Restaurant Sales Revenue, Franchise Fee
What are some types of Expense Accounts for restaurants?
Supplies Expense, Wages Expense, Rent Expense, Insurance Expense, Utilities Expense, and Repairs Expense, General and Administrative Expenses, Depreciation Expense, Losses (Gains) on Disposal of Assets, Cost of Goods Sold
What is Cost of Goods Sold?
In companies with a manufacturing or merchandising focus, usually the most significant expense; it represents the cost of inventory used in generating sales.
A phone bill is what type of expense?
Utilities
Recording in December, what would journal entry be: “Sold $390,000 of January through March season passes and received cash.”
Cash = 390,000
Unearned Pass Revenue = 390,000
Recording in December, what would journal entry be: Received a $3,500 deposit on a townhouse to be rented for five days in January.
Cash = 3,500
Unearned Rent Revenue = 3,500
What are the elements of an income statement?
Operating Revenues, Operating Expenses, Income Before Taxes, Net income
What are Operating Revenues?
Increases in assets or settlements of liabilities from the major or central ongoing operations of the business
What is the difference between an expense and an expenditure?
- Expenditure: any outflow of cash for any purpose, whether to buy equipment, pay off a bank loan, or pay employees their wages
- Expenses: outflows or the using up of assets or increases in liabilities from ongoing operations incurred to generate revenues during the period.
Not all cash expenditures are expenses, but expenses are necessary to generate revenues.
What expenses fall under an Operating Expense?
Supplies Expense, Wages Expense, Rent Expense, Insurance Expense, Utilities Expense, and Repairs Expense, other operating expenses
What expenses do NOT fall under Operating Expenses?
General and Administrative Expenses, Depreciation Expense, Losses (Gains) on Disposal of Assets
What is the Depreciation Expense?
When a company uses buildings and equipment to generate revenues, a part of the cost of these assets is reported as an expense called Depreciation Expense
What are Losses (Gains) on Disposal of Assets?
Companies sell property, plant, and equipment from time to time to maintain modern facilities. When assets other than investments are soldor disposed of for more than their undepreciated cost, gains result. If they are sold or disposed of for less than the undepreciated cost, losses result
What is Operating Income? How do you calculate it?
a measure of the profit from central ongoing operations; Operating revenues less operating expenses
What activities are categorized as Other Items, meaning they are NOT central to ongoing operations?
Interest Revenue, Interest Expense, Losses (Gains) on Sale of Investments
