Acct 3

Refers to the procedures designed to ensure that the company is managed in the interests of the shareholders.

is an auditors statement that the financial statements are prensentations in all material respects in conformity with GAAP.

Can influence a desicion; it is timely and has predictive and/or feedback value.

is accurate, unbiased and verifiable.

Can be compared over time because similar accounting methods have been applied.

allows comparisons across business because similar accounting methods have been applied.

suggests that care should be taken not to overstate assets and revenues and understate liablities and expenses.

• 10-K Annual
• 10-Q Quaterly
• 8-K Any material event

(Paid-in Capital, Contributed Capital in excess of Par) is the amount of Contributed Capital less the Par value of the stock.

is Net Sales less cost of goods sold.

equals Net Sales less cost of goods sold and other operating expenses.

is revenues minus all expenses except income tax expense.

Net Income / Average Total Assets

is the fee charged by the credit card company for its services.

(cash discount) is a cash discount offered to encourage prompt payment of an account receivable.

is a reduction of sales revenues for return of or allowances for unsatisfactory goods.

Gross Profit / Net Sales

bases bad debt expense on an estimate of uncollectible accounts

is the expense associated with estimated uncollectible accounts receivable.

is a contra-asset account containing the estimated uncollectible accounts receivable.

bases bad debt expense on the historical percentage of credit sales that result in bad debts.

estimates uncollectible accounts based on the age of each account receivable.

Net Sales / Average Net Trade Accounts Receivable

Average Collection Period = 365 / Receivables Turnover

are short-term investments with original maturities of three months or less that are readily convertible to cash a whose value is unlikely to change.