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MGMT 30A Study Guide - Quiz Guide: Pro Forma, Gross Profit, Profit Margin

Course Code
Patricia Wellmeyer
Study Guide

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Chapter 3
Account: an individual accounting record of increases and decreases in specific asset, liability,
stokholdes’ euit, eveue, o epese ites
Accounting information system: the system of collecting and processing transaction data and
communicating financial information to decision makers
Accounting transactions: events that require recording in the financial statements because they
affet assets, liailities, o stokholdes’ euit
Chat of aouts: a list of the opa’s aouts
Credit: the right side of an account
Debit: the left side of an account
Double-entry system: a system that records the two-sided effect of each transaction in
appropriate accounts
General journal: the most basic form of journal
General ledger: a ledger that otais all asset, liailit, stokholdes’ euit, eveue, ad
expense accounts
Journal: an accounting record in which transactions are initially recorded in chronological order
Journalizing: the procedure of entering transaction data in the journal
Ledger: the group of accounts maintained by a company
Posting: the procedure of transferring journal entry amounts to the ledger accounts
T-account: the basic form of an account
Trial balance: a list of accounts and their balances at a given time
Chapter 13
Accounts receivable turnover: a measure of the liquidity of receivables; computed as net credit
sales divided by average net accounts receivable
Asset turnover: a measure of how efficiently a company uses its assets to generate sales;
computed as net sales divided by average total assets
Available-for-sale securities: securities that are held with the intent of selling them sometime in
the future
Average collection period: the average number of days that receivables are outstanding;
calculated as accounts receivable turnover dividends into 365 days
Change in accounting principle: use of an accounting principle in the current year different from
the one used in the preceding year
Comprehensive income: the sum of net income and other comprehensive income items
Cuet atio: a easue used to evaluate a opa’s liuidit ad shot-term debt-paying
ability; calculated as current assets divided by current liabilities
Days in inventory: a measure of the average number of days inventory is held; computed as
inventory turnover divided into 365 days
Debt to assets ratio: a measure of the percentage of total financing provided by creditors;
computed as total liabilities divided by total assets
Discontinued operations: the disposal of a significant component of business
Earnings per share: the net income earned by each share of common stock; computed as net
income less preferred dividends divided by the weighted-average common shares outstanding
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