Accounting Theory

A double entry system is only used in the General Ledgener. A Subsidiary Ledger records individual transactions for each debtor or creditor on a single entry basis, and totals should correspond with the Control Account Balanacs.

When the Net Reliasable Value of stock falls below the cost price, then stock should be valued at that NRV. This convervatively recognises the expense when probable and ensures assets are not overstate.

Interest Revenue earned was $__ as expected in the Profit Variance Report, which Ted expeced to receive in the period. However, he has only received $150 and thus he must have $550 Accrued INterest Revenue owing at the end of the period

As the business's assets will generate the same percentage of sales dollars, he must focus on generateing more profit from those dollars. Thus, he must improve the Net Profit Ratio by increasing his mark-up or decreasing expenses relative to sales.

• Return on owner's investment
• return on assets
• assets turnover
• gross profit ratio
• net profit ratio

The estimated selling price of a stock item less any costs involved in its selling, marketing and distribution

• The hours worked to generate these returns may be very long and unstainable.
• May need to emply another staff member which will decrease profitability and perhaps cause further complications to the business in the future

The term eficiency measures the business's management ability to manage their debtors, stocks and creditors to achieve their liquidity and profitabiligy objectives.