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Wednesday, September 23, 2009

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THE COSTS AND BENEFITS OF SELLING ON CREDIT

RECEIVABLES: You already know that receivables arise from a variety of claims against customers and others, and are generally classified as current or noncurrent based on expectations about the amount of time it will take to collect them. The majority...

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Friday, September 18, 2009

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Inventory and Costs of Goods Sold

Goods sold to customers are assets called inventory. Inventory measurements can be surprisingly difficult. Different inventory measurement approaches can lead to wide variations in reported profits or losses. Buy Low, Sell HighThe difference between...

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The Statement of Owner’s Equity

The income statement represents those changes in an owner’s equity derived from the selling and buying activities of the business. Changes in owner’s equity also reflect cash contributions from, and distributions to, the owners. The Statement of Owner’s...

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The Statement of Cash Flows: Show Me the Money!

Many businesses use accrual accounting to reflect a reasonably complete picture of their economic performance over the accounting period. Nonetheless, at some point all accrual assets and liabilities must be reducible to cash. Assets that could not be...

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Wednesday, September 16, 2009

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Classified balance sheets

A CLOSER LOOK AT THE BALANCE SHEET: The balance sheet reveals the assets, liabilities, and equity of a company. In examining a balance sheet, you should always be mindful that the components listed in a balance sheet are not necessarily at fair value....

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Monday, September 14, 2009

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T-ACCOUNTS

T-ACCOUNTS: A useful tool for demonstrating certain transactions and events is the "t-account." Importantly, one would not use t-accounts for actually maintaining the accounts of a business. Instead, they are just a quick and simple way to figure...

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COMPUTERIZED PROCESSING SYSTEMS

ACCOUNTING SOFTWARE: You probably noticed that much of the material in this chapter involves rather mundane processing. Once the initial journal entry is prepared, the data are merely being manipulated to produce the ledger, trial balance, and financial...

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THE TRIAL BALANCE

TRIAL BALANCE: After all transactions have been posted from the journal to the ledger, it is a good practice to prepare a trial balance. A trial balance is simply a listing of the ledger accounts along with their respective debit or credit balances....

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