The Cost of Goods Sold of $640,000 is found by multiplying $1,600,000 by 40%. What was Dark Horse Corp.'s gross profit for 2015? Gross Profit is equal to Sales Revenue minus Cost of Goods Sold, in this case $1,600,000 - $640,000 = $960,000. Their income statement shows that operating expense was $150,000. Cost of goods sold (COGS) was 40% of sales revenue. For the year 2015, Dark Horse Corp.'s sales revenue was $1,600,000. Net income is transferred to the retained earnings account on the balance sheet.

What is the accounting concept that allows for the information from the trial balance to be condensed to what is displayed on the financial statements? Materiality The concept of materiality states that a business is not required to report information on financial statements that would not impact the decision-making of the users of the financial statements. How quickly and easily an item can be converted to cash is known as: liquidity The trial balance for a business at a given point in time typically has much more detailed information than what is depicted on the financial statements. What type of account is 'mortgage payable'? long term liability account T-Account A T-account shows all the activity for a given account for a specific period of time, or in other words, the T-account is the summary of several journal entries. The balance sheet shows the balance of all asset, liability, and equity accounts as of a given date. Balance Sheet Financial report that shows the financial position of a company at a specific point in time a snapshot of the resources that are owned or controlled by company, and how those resources were financed. Real accounts include all asset, liability, and owners' equity accounts and may also be referred to as permanent accounts or Balance Sheet accounts.

The balances in these accounts flow from one accounting period to the next.

Real Accounts Accounts which contain cumulative balances since the inception of the business. The net balance of nominal accounts is transferred to retained earnings at the end of each accounting period. Nominal accounts include all revenue and expense accounts, and may also be referred to as temporary accounts or Income Statement accounts. Income Statement: Examples of Permanent Accounts -CASH AND CASH EQUIVALENTS -RENT PAYABLE -INVENTORY Income Statement: Examples of Temporary Accounts -COST OF GOODS SOLD -SALES REVENUE -RENT EXPENSE Nominal Accounts Accounts that are reset to zero at the end of each accounting period. The income statement reflects a company's: Financial performance over a given period of time What represents the net income/(loss) for the year? The difference between the revenues/gains and expenses/losses. Cost of Goods Sold, Rent Expense, and Wages Expense are examples of what type of account? Expense Account Sales Revenue & Deferred Revenue decrease with: Debit or Credit? Debit Cost of Goods Sold, Accounts Receivable, Cash: Increase or Decrease with a Credit Decrease These accounts increase with a debit or credit: Cash, Depreciation Expense, Prepaid Rent Debit The accounts increase with a debit or credit: Sales Revenue, Deferred Revenue Credit True or False: Transactions are only recorded when there is an exchange of cashįalse: This is true for Cash Basis Accounting, but not for Accrual Accounting. The company reports this situation in its financial statements as this might affect the decisions of stakeholders. However, the government has cut the program recently. What Accounting Principle Does the Following Represent: A microfinance institution has been relying on government collateral subsidies to finance start-ups in rural areas. The principle of Conservatism, says that a company should choose measurement methods that anticipate and record _ but don't anticipate and record _. 'Going Concern' Concept A 'note payable for a bank loan' is an example of a. AQG feels that they will be able to realize the value from the inventory and settle the obligation to RSI in the weeks to come. AQG records the purchase as an increase in inventory and an increase in accounts payable. What Accounting Principle Does the Following Represent: AQG Industries purchases $20,000 of product on credit from RSI Manufacturing. Historical Cost Principle What is the Accounting Equation? Assets = Liabilities + Equity 2. Although the land under Chad's office building is currently believed to be worth $500,000, it is recorded at $250,000 because that is the price he paid for it. What Accounting Principle Does the Following Represent: Real Estate prices in Orderville have increased dramatically over the last five years.

Is cogs a temporary account