Accounting II Midterm Review Flashcards

Terms Definitions
Debit memorandum
memo issued
Purchase Discount
contra-cost in GL
liability
an amount owed by a business
Stockholders
The onwers of a corporation. 568
The Company's economic resources are the Company's ______?
Assets
Transferring informaton from a journal entry to ledger account
Posting
departmental accounting system
an accounting system showing accounting information for two or more departments
Restrictions
Amounts of retained earnings that have been limited for the use as dividends. 584
Judy and Sue have partnership capital account balances of $600,000 and $450,000, respectively and share profits and losses equally. Sara is admitted to the partnership by investing $250,000 for a one-fourth ownership interest. The balance of Sue's Capital
$412,500.
Debt to assets ratio
Debt divided by assets
Journal entries used to prepare temporary accounts for a new fiscal period
Closing Entries
payroll register
business form used to record payroll information
Stockholders' Equity
The owners' equity in a corporation. 571
The partnership agreement of Nieto, Keller, and Pickert provides for the following income ratio: (a) Nieto, the managing partner, receives a salary allowance of $36,000, (b) each partner receives 15% interest on average capital investment, and (c) remain
. $54,000
Formula for EPS
Net Income minus preferred Stock Dividends divided by Weighted average of Common Stock outstanding (Remeber this does not include Tresury Stock)
The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.
True
T or F: Taking a periodic inventory once a month for interim monthly financial statements is usually too expensive to be worthwile
TRUE
T or F: Typically, a business counts as part of its inventory all goods for sale legally owned by the business
TRUE
A report of deposits, withdrawals, and bank balance sent to a depositor by a bank
Bank statement
T or F: Employee benefits are provided by most businesses after one year of employment
FALSE
purchases discount
cash discount on purchases taken by a customer
Accounts receivable turnover
The relationship between net sales and accounts receivable, computed by dividing the net sales by the average net accounts receivable; measures how frequently during the year the accounts receivable are being converted to cash.
In liquidation, balances prior to the distribution of cash to the partners are: Cash $360,000; Peterson, Capital $168,000; Staley, Capital $156,000, and Klugman, Capital $36,000. The income ratio is 6:2:2, respectively. How much cash should be distributed
. $168,000.
Retained earnings
Net income that is retained in the corporation for future use.
Market interest rate
The rate investors demand for loaning funds to the corporation.
T or F: Regardless of the care taken in granting credit, some customers will not pay the amounts owed
TRUE
T or F: When a customer account is known to be uncollectible, the amount becomes a business expense
TRUE
Stock Split
A reduction in the par or staed value of a common stock and the issuance of a proportionate numer of additional shares. 586
T or F As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized.
False
Straight-line method of amortization
A method of amortizing bond discount or bond premium that results in allocating the same amount to interest expense in each interest period.
T or F: The actual cash paid is all that is ever considered as a plant asset's original cost
FALSE
T or F: A cash discount on sales is called a sales discount
TRUE
When a partnership interest is purchased
the transaction is a personal transaction between the purchaser and the selling partner(s).
T or F: At the time a plant asset is bought, the salvage value is only an estimated amount.
TRUE
Dishonored note receivable
A note that the maker fails to pay on the due date.
One potential advantage of financing corporations through the use of bonds rather than common stock is
C. the interest expense is deductible for tax purposes by the corporation
TREASURY STOCK_a corporation's own stock that it has issued and subsequently reacquired from shareholders, but not retired. A corporation may acquire treasury stock for various reasons:
1. To reissue the shares to officers and employees under bonus and stock compensation plans. 2. To signal to the stock market that management believes the stock is underpriced, in the hope of enhancing its market value. 3. To have additional shares available for use in the acquisition of other companies. 4. To reduce the number of shares outstanding and thereby increase earnings per share. 5. To rid the company of disgruntled investors, perhaps to avoid a takeover, as illustrated in the Ford Motor Company Feature Story.
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that
interest must be paid on a periodic basis regardless of earnings.
Mar. 2 Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for $30,000 for services provided in helping the company to incorporate. June 12 Issued 60,000 shares of $5 par value common stock for cash of $375,000. July 11
Mar. 2 Organization expense 30000 Common stock 25000 PIC in excess par value - Comm. stock 5000 June 12 Cash 375000 Common stock 300000 PIC excess par Comm.stock 75000 July 11 Cash 110000 Preferred stock 100000 PIC excess par Pref. stock 10000 Nov. 28 Treasury stock 80000 Cash 8000
On June 1, Mendoza Inc. issues 3,000 shares of no-par common stock at a cash price of $6 per share. Journalize the issuance of the shares assuming the stock has a stated value of $1 per share
June 1 Cash 18000 PIC in excess of stated value 5000 Common Stock 3000
/ 40
Term:
Definition:
Definition:

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