Accounting II 6 Flashcards

Terms Definitions
T or F
discount period
early payment of bills
periodic inventory
merchandise inventory determined by counting, weighing, or measuring items of merchandise on hand
Dividend
A corporation's distribution of cash or stock to its stockholders on a pro rata (proportional) basis.
Analyzing accounts receivable according to when they are due
aging accounts receivable
net sales
Gross ales - sales returns
allowances - sales disconts
closing entries
journal entries used to prepare temporary accounts for a new fiscal period
Investments
The balance sheet caption used to report long-term investments in stocks not inteded as a source of cash in the normal operations of the business. 625
Paid in Capital is sometimes called
Contributed capital
Entity Concept
An organization stands apart from other organizations as a separate economic unit. (Including the Owner!)
The total amount earned by all employees for a pay period
Payroll
T or F: Original cost, estimated useful lige, and miles driven in a year are the three factors considered when calculating annual depreciation expense.
FALSE
post-closing trial balance
trial balance prepared after the closing entries are posted
Direct write-off method
The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.
Parent company
The corporation owning all or a majoriety of the voting stock of the other corporation. 627
Outstanding stock
Capital stock that has been issued and is being held by stockholders.
Liquidating dividend
A dividend declared out of paid-in capital.
A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable.
True
T or F: Income Summary-General is used for adjusting the merchandise inventory account balances for a departmentalized business
FALSE
A completed form authorizing a seller to deliver goods with paument to be made later
purchase order
T or F: In addition to journalizing cash payments, a check register can also be used to maintain the checking account balance.
TRUE
An account balance that is opposite the normal balance
Contra Balance
T or F: The formula for calculating the amount of uncollectible accounts expense base on a percentage of net sales is: Net sales times percentage equals estimated uncollectible accounts expense
TRUE
subsidiary ledger
a ledger that is summarized in a single general ledger account
Cash Dividend
A cash distribution of earnings by a corporation to its shareholders. 578
Elton Manufacturing Corporation purchased 4,000 shares of its own previously issued $10 par common stock for $92,000. As a result of this event,
A. Elton’s Common Stock account decreased $40,000. B. Elton’s total stockholders’ equity decreased $92,000. C. Elton’s Paid-in Capital in Excess of Par Value account decreased $52,000.D. All of the above.
Retained earnings
Net income that is retained in the business.
T or FEach bondholder may vote for the board of directors in proportion to the number of bonds held.
False
The source document for an entry in a check register is a(n)
memorandum
The total shares of ownership in a corporation
capital stock
charging an equal amount of depreciation expense for a plant asset in each year of useful life
straight-line method of depreciation
An accounting form on which a businesss records information about each plant asset
plant asset record
T or F The withdrawal of a partner legally dissolves the partnership.
true
Privately held corporation
A corporation that has only a few stockholders and whose stock is not available for sale to the general public.
Effective-interest method of amortization
A method of amortizing bond discount or bond premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bonds.
One item of information available through a departmental accounting system is the
gross profit for each department
T or F: One payroll system is used by all employees in the United States
FALSE
schedule of accounts receivable
list of customer and make an ascending order who have an outstanding balance in AR and should be equal to balance of AR from the General ledger end of the month
The controller is the Chief Accounting Officer and has 3 responsibilities
1. Mantaining the accounting records.2. Maintianing an adaquate internal controls 3. preparing the finacial reports and taxes
The amount due an individual for a pay period after deductions is referred to as
none of these
A bonus to a new partner will
decrease the capital balances of existing partners based on their income ratios before the admission of the new partner.
When golf equipment subject to sales tax is sold on account, Accounts Receivable is
debited for the amount of merchandise
The ability of a corporation to obtain capital is
enhanced because of limited liability and ease of share transferability.
Social Security and Medicare taxes are paid by
both a and b (the employees and employer)
If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.
True Market rate 25% Contract rate 10% bond will be sold at a discount
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Definition:
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