Prepaid expenses reflect transactions where cash is paid before a related expense is recognized.

A fiscal year refers to an organization's accounting period that spans twelve consecutive months (or 52 weeks).

The quick assets are defined as cash, short-term investments, and current receivables.

Sales Returns and Allowances are recorded in separate contra-revenue accounts.

The term revenues means the same as the term net income.

Payment of accounts payable with cash causes retained earnings to change.

Current assets minus current liabilities is defined as the current ratio.

A net income is indicated if the subtotal amounts in the income statement columns of a worksheet reveal debits exceeds credits.

Prepaid expenses appear as an item in the income statement.

When a credit sale is recorded, cash is debited.

When depreciation is recorded, the account depreciation expense is credited.

The financial statement that reports assets and liabilities is the income statement.

A balance sheet is also referred to as a Statement Of Financial Position.

The opening balance sheet for each financial year must correspond to the closing balance sheet for the preceding financial year.

Retained earnings are equivalent to available cash.

In general, the asset side of the balance sheet is designed to summarize balance sheet accounts with credit balances.

A cost which changes in proportion to changes in volume of activity is called a fixed cost.

A 'sunk' cost is a cost that is not relevant to future business decisions.

Manufacturers normally have only two classes of inventory; goods in process and finished goods.

The income statement for a manufacturer does not contain the line item 'Cost of Goods Sold'.

Costs are capitalized if they produce benefits that are expected to have value in the future.

Costs that are involved in the manufacture of a product are called period costs.

The sales price of a product less the total variable cost of the product is called contribution margin.

The labor cost for janitors, supervisors, materials handlers, engineers, and maintenance personnel would be considered a direct labor cost.

A ratio expresses a mathematical relationship between two numbers.