Accounting Final Exam Review 2 Flashcards

Terms Definitions
note payable
rent expense
expense, debit, IS
Examples of Intangible Assets
external users
investors, creditors, taxing authorities, regulatory agencies, customers, competitors, analysts
Capital and equity represent what?
financial accounting
accounting information and analyses prepared for people outside the organization
birthday rule
method to determine primary insurance
account title
name given to an account
coupon bonds
bonds with interest coupons attached to their certificates; bondholders detach coupons when the mature and present them to a bank or broker for collection
income statement
a financial statement showing the revenue and expenses for a fiscal period
A form for recording transactions in chronological order
Long-lived assets
tangible things like buildings and equipment; and intangible things like patents, trademarks and copyrights.
Segment margin =
CM - avoidable fixed costs
Anything of value owned by a business
Written promise to pay. Unlike accounts payable, which is an oral promise to pay.
Notes payable
Make or Buy
Make and Buy:Direct MaterialsDirect LaborVariable OverheadFixed OverheadPurchase Price (Units x buy unit price)Total Annual CostsMake - Buy = NI (negative-decline)
to bring into agreement or harmony; make compatible or consistent:
refers to the dollar amount of the owners investment in the business
Expanded accounting equation
contributed capital - dividends + revenues - expenses
The person or business concern by whom a shipment is made
Monetary Unit Assumption
Only transactions capable of being expressed in terms of money should be included in the accounting records (the dollar)
long-term liabilities
liabilities owed for more than a year
incremental revenue
The increase or decrease in total revenue earned by selecting one course of action over another.
financial rights to the assets of a business.
owner's equity
the amount remaining after the value of all liabilities is subtracted from the value of all assets
Return on Investment (ROI) focuses on a project's
expected profitability
characteristics of useful information
1- relevance, 2- reliability, 3- comparability, 4- consistency
The Going Concern Assumption
The financial statements are prepared on the assumption that the business will continue its present operations for the foreseeable future.
five main management issues
managing cash needs. setting credit policies. setting credit policies. evaluating the level of accounts receivable. financing receivables. making ethical estimates of credit losses.
What are Cash Equivalents?
Cash Equivalents represent short term, highly liquid investments that can readily be converted to a fixed amount of cash.
A sales journal is used to record both cash and sales on account.
Bank Overdraft
When a business takes more money than is in the account. Most have arrangements with the bank to do this. eg. Liabilities.
Investing activities
what is listed as IA on SCF
obtaining the necessary assets to start and and operate the business. 
(Property, plant and equipment) Cash received from the sale of long term assets such as property plant and equipment.
what is absorption cost?
absorbs cost of the product
costing units with direct costs
Basic Accounting Equations
Assets Liabilities Owner's Equity. This equation must always be kepty in balance for a business to have records that refelct the true nature of all business transactions
an entry made on the debit side of a liability account indicates the account has been
sum-of-the-years digits
assumes asset is used up more in the early years of its life and less in the later years
chart of accounts
a list of accounts used by a business
average cost metho
uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory
Sale on account
A sale for which cash will be received at a later date
"Allowance for Bad Debts"
an asset account, and its balance is normally a credit
SEC requires that a company discuss the follow topics at least once a year.

(1) Results of operations

(2) Capital resources and liquidity

(3) Favorable and unfavorable trends should be reported
Cost of goods available for sale
Beginning inventory + cost of goods purchased
3 categories of contingent liabilities
1.Probable - pretty likely to happen 2.Reasonably Possible - maybe, maybe not 3.Remote - not very likely to happen
Net income & investment of assets in the business by the owner
The proprietorship of a business may be increased by
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