Exam 15: Overhead Application: Variable and Absorbtion Costing

Gross profit is the excess of sales over all expenses.

The following information was extracted from the accounting records of Poe's Company: Beginning Paid-In Capital \ 87,000 Beginning Retained Earnings \ 21,000 Beginning As sets \ 455,000 During the period assets increased by $150,000, revenues were $200,000, and expenses were $165,000. No additional investments were made by the owners. The amount of Poe Company's liabilities at the end of the period is:

Since revenues and expenses are associated with stockholders' equity, then revenues and expenses appear on the balance sheet.

The stockholders' equity section of a corporation's balance sheet can be divided into:

are sections of the balance sheet.

Entries that record implicit transactions

The ownership claim arising from reinvestment of previous profits is called:

Economic resources that are expected to benefit future activities

A method of keeping track of how multitudes of transactions affect each particular asset, liability, revenue, and expense

A multi- step income statement:

The principle that states that companies record revenue in its accounts only when it has earned and realized the revenue

From the following information, determine the beginning balance in the Retained Earnings account. Dividends \ 8,000 Ending Retained Earnings 24,000 Net Income 14,000 Paid- in Capital, beginning 29,000 Paid-in Canital ending 26,000

Elgin Company purchased $4,000 of inventory, paying cash for 25% of the purchase, with the remainder on account. Elgin Company should:

would result in an increase in net income under the accrual basis, but not an increase in net income under the cash basis.

American generally accepted accounting principles (GAAP) are largely the work of the International Accounting Standards Committee (IASC).

Revenue and expense accounts are permanent stockholders' equity accounts.

The cost recovery concept carries asset balances forward because their costs are expected to be recovered in future periods.

An example of an implicit transaction is cash received on account.

The body that sets generally accepted accounting principles in the United States

Land is depreciated using a very long estimated useful life.