Peregrine_Exam2

What is a general ledger? A general ledger account is an account or record used to sort, store and summarize a company's transactions. asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and Equipment liability accounts including Notes Payable, Accounts Payable, Accrued Expenses Payable, and Customer Deposits stockholders' equity accounts such as Common Stock, Retained Earnings, Treasury Stock, and Accumulated Other Comprehensive Income What is the difference between accounts payable and accounts receivable? Accounts payable is a current liability account in which a company records the amounts it owes to suppliers or vendors for goods or services that it received on credit. Accounts receivable is a current asset account in which a company records the amounts it has a right to collect from customers who received goods or services on credit. What is the cost of goods sold? The cost of goods sold is the cost of the products that a retailer, distributor, or manufacturer has sold. What is owner's equity? Owner's equity is one of the three main sections of a sole proprietorship's balance sheet and one of the components of the accounting equation: Assets = Liabilities + Owner's Equity. What is principles of accounting? Principles of accounting can also refer to the basic or fundamental accounting principles: cost principles, matching principles, full disclosure principles, materiality principles, going concern principles, economic entity principles, and so on. In this context, principles of accounting refers to the broad underlying concepts which guide accountants when preparing financial statements. What is equity? Equity can indicate an ownership interest in a business, such as stockholders' equity or owner's equity. Equity can mean an owner's interest in a personal asset. For example, the owner of a $200,000 house that has a mortgage loan of $75,000 is said to have $125,000 of equity in the house. What is meant by reconciling an account? Reconciling an account is likely to mean proving or documenting that an account balance is correct. What is included in cash and cash equivalents? In accounting, a company's cash includes the following: currency and coins checks received from customers but not yet deposited checking accounts petty cash Cash equivalents are short-term, highly liquid investments with a maturity date that was 3 months or less at the time of purchase. money market accounts U.S. Treasury Bills commercial paper What is the difference between an implicit cost and an explicit cost? An implicit cost is present but it is not initially shown or reported as a separate cost. An explicit cost is a cost that is present and it is clearly shown or reported as a separate cost. What is the difference between stocks and bonds? Stocks, or shares of capital stock, represent an ownership interest in a corporation. Every corporation has common stock. Bonds are a form of long-term debt in which the issuing corporation promises to pay the principal amount at a specified maturity date. AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE OWNERS' EQUITY? Client Fees IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL YIELD THE LOWEST NET INCOME IS: LIFO (LIFO i