MGT 8803 ANSWERS AND QUESTIONS SET A+
✔✔Notes Receivable - ✔✔A written promise that a customer will pay a fixed amount of
principal plus interest by a certain date in the future.
✔✔Balance Sheet - ✔✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date. Assets = Liabilities + Owner's Equity
✔✔Income Statement - ✔✔Revenues - Expenses = Net Income; Shows activity over a
time period
✔✔Accrural basis accounting - ✔✔Accounting basis in which companies record
transactions that change a company's financial statements in the periods in which the
events occur.
✔✔Cash Basis Accounting - ✔✔Reporting income when the cash is received and
expenses when the cash is paid.
✔✔Matching Principle (Expense Recognition Principle) - ✔✔Guides accounting for
expenses, ensures that all expenses are recorded when they are incurred during the
period, and matches those expenses against the revenues of the period.
✔✔Gross Margin - ✔✔Net sales - COGS
✔✔Earnings Per Share (EPS) - ✔✔net income/shares outstanding
✔✔FIFO method - ✔✔an inventory costing method that assumes that the earliest goods
purchased are the first to be sold
✔✔LIFO - ✔✔inventory accounting in which the most recently acquired items are
assumed to be the first sold; method is supposed to create the lowest ending inventory
in a period of rising prices. Also create a lower taxable income, lower gross profit.
✔✔weighted average - ✔✔the sum of the product of the number of units and the value
per unit divided by the sum of the number of units, represented by M
✔✔Notes Receivable - ✔✔A written promise that a customer will pay a fixed amount of
principal plus interest by a certain date in the future.
✔✔Balance Sheet - ✔✔A financial statement that reports assets, liabilities, and owner's
equity on a specific date. Assets = Liabilities + Owner's Equity
✔✔Income Statement - ✔✔Revenues - Expenses = Net Income; Shows activity over a
time period
✔✔Accrural basis accounting - ✔✔Accounting basis in which companies record
transactions that change a company's financial statements in the periods in which the
events occur.
✔✔Cash Basis Accounting - ✔✔Reporting income when the cash is received and
expenses when the cash is paid.
✔✔Matching Principle (Expense Recognition Principle) - ✔✔Guides accounting for
expenses, ensures that all expenses are recorded when they are incurred during the
period, and matches those expenses against the revenues of the period.
✔✔Gross Margin - ✔✔Net sales - COGS
✔✔Earnings Per Share (EPS) - ✔✔net income/shares outstanding
✔✔FIFO method - ✔✔an inventory costing method that assumes that the earliest goods
purchased are the first to be sold
✔✔LIFO - ✔✔inventory accounting in which the most recently acquired items are
assumed to be the first sold; method is supposed to create the lowest ending inventory
in a period of rising prices. Also create a lower taxable income, lower gross profit.
✔✔weighted average - ✔✔the sum of the product of the number of units and the value
per unit divided by the sum of the number of units, represented by M
