Practice Exam 1 Flashcards
Calculate Ending Equity
Ending Equity = Beginning Equity + Revenues - Expenses
Balance Sheet Equation
Assets = Liabilities + Equity
Net Income Equation
NI = Revenues - Expenses
(nothing else.)
Return on Assets Equation
RoA = NI / Average Total Assets
or
RoA = (Revenues - Expenses) / [(Beginning Assets + Ending Assets) / 2]
A business’s source documents
Identify and describe transactions and events entering the accounting system
Direct materials
CRUCIAL parts of the finished product, can be cost-effectively traced through the manufacturing process to the finished good
Ending AR Equation
Ending AR = Beginning AR + Services on Acc - Customer Collections
Debt Ratio Equation
Debt Ratio = Total Liabilities / Total Assets
T/F: Noncurrent items are expected to come due within one year or the company’s operating cycle
False
Straight Line Depreciation
(Cost - Salvage) / Useful Life
Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,200. Fragment collected the entire $9,600 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made on December 31 would be:
A debit to Unearned Revenue and a credit to Rent Revenue for $3,600
Flexibility of practice when applied to managerial accounting means that:
Managerial accounting systems provide internal information reflecting the needs of managers to analyze, plan, and control products and processes.
Indirect Costs include
Supervisor Salary, rent, and maintenance department employee wages.
Product Costs include
Direct Materials, Direct Labor, Factory Overhead
When sold, they are COGS expenses
Continuous Improvement
the method that rejects the notion of “good enough” and challenges employees and managers to improve operations
