Exam 1 study guide

Exam 1 study guide - From Spring 07 Test-When a corporation...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: From Spring 07 Test-When a corporation pays a note payable and interest, they will debit notes payable and interest expense.- Stockholders equity is affected by: dividends, revenues, & expenses (not cash receipts)- Salary Expense is a nominal (temporary) account- Certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles to match the costs of production with revenues as earned- Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000. What net effect do these entries have on owners equity? Decrease of $18,000- Pappy Corporation received cash of $13,500 on September 1, 2007 for one years rent in advance and recorded the transaction with a credit to Unearned Rent. The December 31, 2007 adjusting entry is debit Unearned Rent and credit Rent Revenue, $4,500-Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and dividends of $30,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a debit of $80,000- objective of financial reporting:- Provide information that is useful in investment and credit decisions- Provide information about enterprise resources, claims to those resources, and changes to them- Provide information that is useful in assessing cash flow prospects- SEC has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction- the "due process" system used by the FASB in the evolution of a typical FASB Statement of Financial Accounting Standards: 1. Discussion Memorandum, 2. Exposure Draft, 3. Statement of Financial Accounting Standards- The underlying theme of the conceptual framework is decision usefulness- Accounting information is considered to be relevant when it is capable of making a difference in a decision- verifiability is an ingredient of the primary quality of reliability- classified as an extraordinary item:- Losses from a major casualty- Losses from an expropriation of assets- Gain on a sale of the only security investment a company has ever owned NOT: Losses from exchange or translation of foreign currencies- Earnings per share from both continuing operations and net income should be disclosed on the face of the income statement is a required disclosure in the income statement when reporting the disposal of a component of the business From Chpt. 1&2 Quiz- Accounting standards are now more likely to require the recording or disclosure of fair value information due to its inherent subjectivity- FASB Technical Bulletins are less authoritative than FASB Standards and Interpretations- The Financial Accounting Foundation oversees the operations of the FASB- the following are publications of the FASB: Statements of Financial Accounting Concepts,...
View Full Document

This note was uploaded on 04/05/2008 for the course ACC 310 taught by Professor Thomas during the Spring '08 term at N.C. State.

Page1 / 7

Exam 1 study guide - From Spring 07 Test-When a corporation...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online