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Chapter 3-4

COMMERCE 1AA3 Chapter Notes - Chapter 3-4: Petty Cash, Passive Electronically Scanned Array, List Of The Shield Episodes

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Emad Mohammad

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Accounting 1AA3 Chapters 3,4: Key Terms
Chapter 3
Accumulated Depreciation - the account showing the sum of all depreciation expense from the date of
acquiring a capital asset.
Adjusted Trial Balance - a list of all the ledger accounts with their adjusted balances.
Carrying Amount - the asset's cost minus accumulated depreciation.
Cash-Basis Accounting - accounting that records only transactions in which cash is received or paid.
Classified Balance Sheet - a balance sheet that shows current assets separate from long-term assets, and
current liabilities separate from long-term liabilities.
Closing Entries - entries that transfer the revenue, expense, and dividend balances from these respective
accounts to the Retained Earnings account.
Contra Account - an account that always has a companion account and whose normal balance is
opposite that of the companion account.
Current Ratio - current assets divided by current liabilities. Measures a company's ability to pay current
liabilities with current assets.
Debt Ratio - ratio of total liabilities to total assets. States the proportion of a company's assets that is
financed with debt.
Deferral - an adjustment related to a transaction for which a business has received or paid cash in
advance of delivering or receiving goods or services.
Depreciation - an expense to recognize the portion of a capital asset's economic benefits that has been
used up during an accounting period.
Multi-Step Income Statement - an income statement that contains subtotals to highlight important
relationships between revenues and expenses.
Net Working Capital - Current Assets - Current Liabilities. Measures the ease with which a company will
be able to use its current assets to pay off its current liabilities.
Permanent Accounts - assets, liabilities, and shareholders' equity accounts, which all have balances that
carry forward to the next fiscal year.
Report Format - a balance sheet that lists assets at the top, followed by liabilities, and then
shareholders' equity.
Single-Step Income Statement - lists all revenues together and all expenses together; there is only one
step in arriving at net income.
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