LorickExerCh.3.xlsx - Enter First Last Name Before Starting...

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Enter First & Last Name Before Starting Homework!!!!! (Otherwise you'll have to do homework twice!!) First Name: Aaron Last Name: Lorick Chapter: 3 - Preparing Financial Statements Score: 100% Ex 1 Match the following definitions to the appropriate term: a) Measures company's ability to pay short term debts. Current Ratio b) Measures profit (net income) per dollar of sales Profit Margin c) Total depreciation taken over life of the life of an asset Accumulated Depreciation d) Intangible Assets e) Real or "balance sheet" accounts. Permanent Accounts f) Revenue Recognition Principle g) Record expenses in same period as the revenues they generate Matching Principle h) Adjusting Entries i) Cash received in advance of performing services. Unearned Revenue j) Cash Basis k) Long-lived assets used to operate the business Plant Assets l) Depreciation m) Expected to be converted to cash or used in the business within one year. Current Asset n) Recognize revenue when earned and expenses when incurred. Accrual Basis o) Closing Entries p) Long-Term Investments q) Debts/obligations due within one year. Current Liabilities r) Temporary Accounts Exclusive rights and privileges to noncurrent assets without physical substance. Record revenue when you perform service or deliver product not when cash received. Necessary to update the accounts prior to preparing financial statements. Recognize revenue when cash received and expenses when cash paid (Not GAAP) Allocating cost of an asset to an expense account over the asset's useful life. Necessary to update the retained earnings account and zero out temporary accounts. Assets expected to be held for more than 1 year and not used to operate the business. Accounts that are measured over a period of time (revenues, expenses & dividends).
Ex 2 Account Statement Section a) Common Stock Credit Balance Sheet Equity b) Dividends Debit Retained Earnings Stmt N/A c) Equipment Debit Balance Sheet Plant Asset d) Depreciation Expense Debit Income Statement Expense e) Patent Debit Balance Sheet Intangible Asset f) Accum. Deprec.-Equip. Credit Balance Sheet Plant Asset g) Copyright Debit Balance Sheet Intangible Asset h) Interest Expense Debit Income Statement Expense i) Land (held for speculation) Debit Balance Sheet Long-Term Investment j) Interest Payable Credit Balance Sheet Current Liability k) Building Debit Balance Sheet Plant Asset l) Supplies Expense Debit Income Statement Expense m) Franchise Debit Balance Sheet Intangible Asset n) Inventory Debit Balance Sheet Current Asset o) Note Receivable (5/1/13) Debit Balance Sheet Long-Term Investment p) Insurance Expense Debit Income Statement Expense q) Supplies Debit Balance Sheet Current Asset r) Prepaid Rent Debit Balance Sheet Current Asset s) Rent Expense Debit Income Statement Expense t) Note Payable (10/1/18) Credit Balance Sheet Long-Term Liability u) Retained Earnings Credit Balance Sheet Equity v) Service Revenue Credit Income Statement Revenue w) Unearned Revenue Credit Balance Sheet Current Liability x) Accounts Payable (A/P) Credit Balance Sheet Current Liability y)

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