Accounting - CH 12- Financial Statements, Closing Entries, And Reversing Entries

Current Assets

Cash and other assets or resources that are expected to be realized in cash or to be sold or consumed during the normal operating cycle of the business (one year of the normal operating cycle is less than 12 months)

The data needed to calculate working capital and its current ration can be found on which of the following?

Classified balance sheet

Long-Term Liabilities

Debts payable over comparatively long period, usually more than one year

Current Liabilities

Debts that will become due within the normal operating cycle of a business usually within one year, and that are normally paid from current assets.

Which of the following is not an example of a current asset

Equipment

Selling Expenses

Expenses directly connected with the selling activity, such as salaries of sales staff., advertising expenses and delivery expenses

General Expenses

Expenses incurred in the administration of a business, including office expenses and any expenses that are not completely classified as selling expenses or other expenses

What is the term used for the profit on a sale before any operating expenses have been deducted?

Gross Profit

What is the third entry of the closing procedure for a merchandising business?

Income Summary to Capital

Property and Equipment

Long-lived assets that are held for use in the production or sale of other assets or services ; also called fixed assets

Delivered cost of purchases

Net purchase plus freight in: Net Purchases +freight in ________________ Delivered Cost of Purchases

Gross Profit

Net sales minus Cost of goods sold, or profit before deducting operating expenses Net Sales - Cost of Good Sold ____________________________ Gross Profit

Net Purchases

Purchases Minus Purchases Returns And Allowances, Minus Purchase Discounts Purchases - Purchases Returns and Allowances - Purchase Discounts _______________________________ Net Purchases

What general journal entry is used to undo a previous made adjusting entry>

Reversing entry

Net Sales

Sales minus Sales Returns And Allowances, Minus Sales Discounts: Sales - Sales Returns and Allowances - Sales Discount ___________________________________________ Net Sale

Liquidity

The ability of an asset to be quickly turned into cash by selling it or by putting it up as security for a loan

Net Income or Net profit

The final figure on an income statement after all expenses have been deducted from revenues

Notes Receivable (current)

Written Promises to pay the seller/lender the amount due in a period of less than one year.

working capital

a firm's current assets less its current liabilities. the amount of capital a firm has available to use or to work with during a normal operating cycle.

Current Ratio

current assets divided by current liabilities

Reversing entries

the reverse of certain adjusting entries, reversing entries are recorded as of the firs day of the following fiscal period. the use of reversing entries is optional

Current Ratio

A firm's current assets divided by its current liabilities. portrays a firm's short term debt-paying ability