Accounting II 7 Flashcards

Terms Definitions
T or F
sales invoice
bill sent to customer
accounting equation
equation showing the relationship among assets, liabilities, and owner's equity; stated as assets = liabilities + owner's equity
Deficit
A debit balance in retained earnings
T or F: Recording uncollectible accounts expense in the same fiscal period in which the orginal sale on account was made is an application of the Matching Expenses with Revenue acounting concept
TRUE
merchandise
goods brought into a store for resale
Purchase requisition
form used a business to requested
Trading securities
Securities that management intends to actively trade for profit. 622
Preferred stock
Capital stock that has some preferences over common stock.
Accrual Accounting
Recording revenues and related expense transactions in the same accounting period that goods or services are provided, REGARDLESS of when cash is received or paid.
T or F: Transferring payroll amounts electronically from the employer's account to the employee's bank account is known as electric funds transfer
TRUE
T or F: Calculating an accurate merchandise cost in order to adequately report a business' financial progress and condition is an application of the accounting concept Adequate Disclosure
TRUE
capital stock
total shares of ownership in a corporation
Account receivable
A claim against the customer created by selling merchandise or services on credit.
Temporary investments
The balances sheet caption used to report investments in income-yielding securities that can be quickly sold and converted to cash as needed. 622
The difference between common stock issued (1200) and outstanding (1000) is equal to
Tresuray stock (200)
The Lange Company has a simple capital structure. The company has 20,000 shares of common stock outstanding. Net income for the year was $65,000. Lange declared and paid a preferred stock dividends of $4,000 during the year. Earnings per share for the
$3.05
The Owner's current investment is the ________?
Owner's Equity
All property not classified as real property
Personal property
A business form used to show an authorized person's approval for a cash payment
voucher
An account that reduces a related account on a financial statement
Contra Account
T or F: Benifit hours used are recorded on each employee's time card
TRUE
double-entry accounting
recording of debit and credit parts of a transaction
Stock Dividend
A distribution of shares of stock to its stockholders. 580
T or F A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.
False
Retained earnings statement
A financial statement that shows the changes in retained earnings during the year.
Bond indenture
A legal document that sets forth the terms of the bond issue.
The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life
depreciation expense
T or F: If the cost of ending merchandise inventory is understated, the total stockholders' equity will be overstated
FALSE
T or F: One disadvantage of the direct write-off method of recording uncollectible accounts expense is that the expese may not be recorded in the same fiscal period as the revenue for the sale
TRUE
schedule of accounts receivable
a list of customer accounts, account balances, and total amount due from all customers
Partners Don and Ron have agreed to share profits and losses in an 80:20 ratio respectively, after Don is allowed a salary allowance of $80,000 and Ron is allowed a salary allowance of $40,000. If the partnership had net income of $80,000 for 2010, Ron’
. $32,000
Kunkel Corporation reports net income of $450,000. Prepare the entry to close net income.
Dec. 31 Income summary 450000 Retained earnings 450000
Bearer (coupon) bonds
Bonds not registered in the name of the owner.
T or F: A common length of time for summarizing and reporting accounting information is one year
TRUE
T or F: In the lower cost of market inventory vosting method, if the unit price is higher than the current market price, the inventory cost is reduced to the market price
TRUE
T or F: When a debit memo is issued for the return of merchandise purchased, the original voucher is discarded
FALSE
interim departmental statement of gross profit
a statement showing gross profit for each department for a portion of a fiscal period
Formula for Return on Comon stockholders equity
(net income minus Prefered stock dividend) divided by Average stock holders equity( Beg + End/2) then subtract par value of prefered stock from the total .
Using fractions based on years of a plant asset's useful life
sum-of-years-digits method of depreciation
Garr invests $20,000 in cash (admission by investment) in the Massey-Dix partnership to acquire a 1/4 interest. In this case
the total capital of the new partnership is greater than the total capital of the old partnership.
When a sales return has been granted, the amount of the return must be deducted from the amount of the original sale
before the discount is calculated
A major disadvantage resulting from the use of bonds is that
interest must be paid on a periodic basis.
The total of each column in a departmental sales journal is
posted at the end of the month
False- The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account.
The carrying value of a bond is calculated by adding or subtracting the premium or discount to the face of the bond.
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