ACCT 410x Foundations of Accounting List of Terms

ACCT 410x Foundations of Accounting List of Terms - ACCT...

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ACCT 410 - ACCOUNT LIST The list of accounts below has been modified to include “classified balance sheet” categories [in red] . Please also look at the uses and ratios associated with the classified balance sheet. ASSETS Current Assets : assets that are cash, will be turned in cash, or will be used up within one year. Cash : coins, currency, unrestricted amounts on deposit. Short-Term Investments/Marketable Securities: a business will investment excess cash by buying stocks, bonds, etc. of other companies such as IBM, Microsoft, etc. Receivables: are cash amounts due from other parties. The word in front of receivable tells you why it is owed. Some common examples: - Accounts Receivable: cash due from customers or clients in very short time period, generally 30 to 60 days of receiving the bill. - Loan/Note Receivable: cash due which is evidenced by a formal written promissory note. The note will specify when the payment is due and the interest rate. - Interest Receivable: interest due on a loan. [Note: the principal portion is separate from the interest portion. - Dividends Receivable: dividends due from stock investments. These amounts are “receivable” when the board of directors of the other company votes in favor of a dividend. Less: Allowance for Doubtful Accounts: portion of accounts receivable that is estimated to be uncollectible. Inventory: items held for sale in the ordinary course of business. Prepaid Expenses : items where the service is paid for in advance. These items will be expensed later during the “adjustment process. Some common examples: - Prepaid Rent, Prepaid Insurance, Prepaid Salaries, Prepaid Advertising. the following assets last longer than one year, are tangible, and are used in operations to generate revenue all are depreciated [expensed] over the period that they help generate revenues. The exception is land. No explanations are included for those items that are obvious based on their title. Land Buildings Furniture & Fixtures Machinery/Equipment: Capital Leases: Typically a leased items is not included on the balance sheet as it is not owned. If it meets certain criterion, it is viewed as “an in-substance purchase” and included as an asset. If does not meet the criterion, it is considered an operating lease and excluded from the balance sheet. Accumulated Depreciation : contra-asset [contra means negative balance] is opened for each corresponding asset account. It reflects the amount of depreciation that has been recognized for each asset [except land]. The cost allocated to a period is recorded as depreciation expense and the asset value is reduced using this contra-asset account. This is recorded during the adjustment process. Intangibles:
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This note was uploaded on 02/21/2012 for the course ACCT 410x taught by Professor Bonner during the Spring '06 term at USC.

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ACCT 410x Foundations of Accounting List of Terms - ACCT...

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