Accounting 112 Flashcards

Terms Definitions
Net Realizable Value
earnings distributed to stockholders
Recording transactions in a journal
what you owe to people
straight line method
(price-residual) x (1/years)
When talking about cash flow statements,
decrease in assets
the money paid for Employee Services
Contributed capital
Common stock and preferred stock
Generally Accepted Accounting Principles
GAAP stands for?
Revenues and expenses are temporary accounts and are closed at the end of the accounting period.
Revenue Principle
Recognize revenue when it is earned.
Internal users
of accounting information are those directly involved in managing and operating an organization.
Intangible Assets
Long-term assets with no physical substance whose value stems from the rights or privileges they extend to their owners.
Direct method
Reports cash receipts and cash disbursements from operating activities.
Cash collected from revenues - cash payment for expenses = income before income taxes.
Income before income taxes - cash payments for income taxes = net cash
S Corporation
Corporation that meets special tax qualifications so as to be treated like a partnership for income tax purposes.
Cost Concept
determines the amount intially entered into the accounting records for purchases.
This assumes that the earliest goods purchased are the first to be sold. Companies determine the cost of the ending inventory by taking the unit cost of the most recent purchase and working backward until all units of inventory have been costed 
Define asset
Economic resources to generate revenue and ultimately a profit
the costs of goods sold (costs of sales); help generate revenues
capital stock
total shares of ownership in a corporation
service business
A business that provides a needed service for a fee.
a name, mark, or character given legal protection . it's an intangible asset
Blank Endorsement
includes only the signature or stamp of the depositor.
Cash Dividend
Cash distribution of earnings by a corp. to its shareholders
just-in-time processing
a business philosophy that focuses on eliminating time, cost, and poor quality within manufacturing processes
Financial rights to the assets of a buisness
Analyze Transactions/ Events
-Analyze or look over source document-Determine what accounts are affected-Determine if account affected is increasing or decreasing to specific assets, liabilities, equity revenues, and expenses -Debits and credits record inc or dec to accounts
Capital Lease Criteria
1.Lease transfers ownership to lessee at end of lease
2.Lease includes bargain purchase option
3.Lease is for 75% or more of economic life of property
4.PV of lease payments is 90% or more of the market value of property
Credit Terms
terms for payment on account by the buyer to the seller
Relevant (useful) and a faithful representation (accurate)
Accounting information should be...
Dishonored Check
A check that a bank refuses to pay
Convertible Bonds
Exchanged for a fixed number of shares of the issuing coporation common stock
Normal Balance
the side of the account that is increased
Expendable private purpose trust funds may or may not require a
legal budget: 1.est.revenues; appropriations; fund balance(old) 2. encumbrances; reserve for encumbrances
what is an entity
anything about which the organization wants to collect and store information.
unit of measure concept
A concept of accounting requiring that economic data be recorded in dollars.
Job Cost Sheet
form prepared for a job that records the materials, labor and manufacturing overhead costs.
Petty Cash
an amount of cash kept on hand and used for making small payments.
Reversing entries are optional;
they are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of a reporting period.
How do you retrieve journal and ledger data in a data base?
Run a Query.
ending inventory is under/over stated
income before income taxes will be under/over stated respectively.
A single-step income statement
includes cost of goods sold as an operating expense and shows only one subtotal for total expenses, one subtraction to arrive at net income.
What is Retained Earnings?
It is the accumulated Net Profit of the company from its day 1 after paying dividends.
Steps to preparing a work sheet
1. Enter and total the account balances in the Trail Balance columns.
2. Enter and total the adjustments in the Adjustments columns. (A letter identifies the debit and credit for each adjustment and can act as a key to a breif explanation at the bottom of the work sheet.)
3. Enter (after crossfooting, or adding and subtracting from left to right) and total the adjusted account balances in the adjusted trail balance columns
4. Extend (transfer) the account balances from the Adjustetd Trail Balance columns to the Income Statement columns or the balance sheet columns (depending on which typre of account is involved)
5. Total the income statement columns and the balance sheet columns. Enter the new income or net loss in both pairs of columns (one will be entered in a debit columns, and one will be entered in a credit column) as a balancing figure, and recompute the column totals.
Imputed Interest. Non-Interest bearing note.
1. Use PV and Chart to determine the Interest Rate
2. Initial journal entry debits the Note Receivable at PV, and Credits Sales Revenue and PV.
3. Each year, Note Receivable is debited with interest earned, and Interest income is credited.
*Remember to add the interest to the PV of payment each year, the Payment at the end of year 3 should equal the cash sales price + Interest for all 3 years @ specific Interest Rate
Some businesses choose to be organized as corporations because?
1. They can raise larger amounts of money to grow the business by selling shares of stock to investors.
2. The owners who have invested in the business cannot lose more than the amount they have invested.
3. Shareholders can sell their shares to other investors in the stock market.
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