Accounting 51 Flashcards

Terms Definitions
Bonds Payable
B/S
Earnings Yield (Formula)
Assets=
Liabilities + Owners Equity
Profit Margin Ratio
Net income/Net Sales
FASB
Financial Accounting Standards Board :-Independent and not regulated by government
liability
an amount owed by a business.
Asset
Anything of value that is owned
dividends have no effect on
net income
types of business
services mechandising and manufacturing
Comparable Information
allows comparisons accross businesses because similar accounting methods have been applied
Accounting records
organized summaries of a business's financial activities
debit
the left side of a standard account
Uncollectible accounts
Accounts recievable owed by customers who cannot or will not pay. Also called bad debt
Accounting System
A planned process for providing financial information that will be useful to management.
Liabilities:
Present obligations of an entity that require an outflow of the entity's resources.
Consistency
use the same accounting methods from period to period or disclose changes in accounting methods
T Account
account device used to analyze transactions
When an account receivable that has been written off is subsequently collected, the account receivable is said to be reinstated.
true
If the total credits exceed total debits in the income statement columns of the work sheet, the business has had a net loss.
True
Residual income
The net operating income that an investment center earns above the minimum required return on its assets
Actual Overhead
The actual amount of overhead incurred within a given period (all the bulls received for a certain period)
for-profit business
operates to earn money for the owner
variability
relation between a cost or benefit and an activity
Accounts receivable
epresent credit sales that have not yet been collected.
Balance sheet
the financial statement that reports a firms financial condition at a specific time. It tells the firms net worth.
equities
financial rights to the assets of a business
sales discount
Sales discounts for early payment are customary in some industries. When a merchandising firm gives a customer a discount for early payment, it records a sales discount. Cash and Sales Discounts are debited, and Accounts Receivable is credited. Sales Discounts is a contra account to sales in the income statement.
Operating Profit Margin (Definition)
measures pre-financing and pre-tax OPERATING EARNINGS relative to Sales
Capital
The interest of the owners in an enterprise; also known as owners' equity.
a buisness that buys and resells merchandise to reatail merchandising buisnesses
Wholesale Merchandising Buisness
withdrawals
assets taken out of a business for the owner's personal use
Straight-line method of depreciation
charging an equal amount of depreciation expense for a plant asset in each year of useful life
purchase return
is the return of merchandise by the purchaser to the supplier.
Generally Accepted Accounting Principles
Accounting rules, created by the Financial Accounting Standards Board, that govern how accountants measure, process, and communicate financial information
Special Journal
A journal used to record to record only one kind of transaction
Dividend reinvestment program (DRIP)
A program that allows current shareholders to use their cash dividends to buy more shares of the company's stock
Variable Costs
Cost that varies and depends on how much production is taking place. (the material costs for a certain product)
Balance Of The Account
The amount of difference between the debits and the credits tha have been entered into an account
adjusting entries
journal entries made at the end of an accounting period to update account balances; required b/c of accrual accounting
predetermined factory overhead rate
the rate used to apply factory overhead costs to the goods manufactured. the rate is determined from budgeted overhead costs and estimated activity usage data at the beginning of the fiscal-period
Double Declining Balance Depreciation
1. Find straight line percentage using the expected useful life. 2. Double that percentage. 3.Compute depreciation by mulstiplying the rate times the current value of the asset. *Estimated residual value is not computed, but asset shouldn't be depreciated beyond residual value.
budgeting income statement
prepared last and is central to the budgeting process along with the cash budget
Cost, Estimated useful life, estimated residual value
depreciation is based on three factors...
What is a service business?
A business that performs a job actively for a fee.
What is Flexing the budget?
Revising the budget to what would have been if the planned level of output had been different.
foreign currency is th efunctional currency if:
-all A&L are translated at the current exchange rate on the BS
-stockholder equity accounts are translated @ historic rate
-revenues and expenses are translated @ the exchage rate that existed when the transactions too place. average rate may be used.
-uxse current method
What is the key characteristic of unexpired items?
an explicit transaction in the past has created an asset, and a subsequent implicit transaction serves to adjust the value of this asset
What is a cash dividend and what are the three requirements needed to distribute it?
What is the J/E to Record this
A cash dividend is a pro rata distribution of cash to shareholders.
Requires
1)Retained Earnings
2)Adequate Cash
3)Declared Dividends
(First # of shares * Declared Dividends = Dividends)
Dividends XXX
Dividends Payable XXX
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