Finance exam terms

Controller

Oversees preparation of financial statements and regulatory reporting

Rent expense

Expense account with a normal debit balance

Rent payable

Liability account with a normal credit balance

Rent receivable

Asset account with a normal debit balance

Accounting cycle

Identify, journalize, post to ledger, trial balance, financial statements

Managerial accounting

Provides information for internal users

Debt ratio purpose

Assesses risk of default

Debt ratio formula

Total liabilities / total assets

Return on assets (ROI)

Net income / average total assets

Unearned revenue

Payment received before service is performed (example: gift cards)

Corporation disadvantage

Corporations are separate taxable entities from owners (double taxation)