Balances owed to others for goods, supplies, or services purchased on open account.
Accrual basis method of warranty costs (expense warranty approach).
Warranty costs are charged to operating expense in the year of sale.
Bearer (coupon) Bonds
Bonds not recorded in the name of the owner may be transferred from one owner to another by mere delivery
Bonds that give the issuer the right to call and retire the bonds prior to maturity
CHAPTER 5 OUTLINE
(L.O. 1) Usefulness of the Balance Sheet
Limitations of the Balance Sheet
Property, Plant & Equipment
CHAPTER 1 OUTLINE
(L.O. 1) Financial Statements and Financial Reporting
(L.O. 2) Accounting and Capital Allocation
(L.O. 3) Objective of Financial Reporting
(L.O. 4) The Need to Develop Standards
(L.O. 5) Parties Involved in Standard-Setting
_ 1. (L.O. 1) The essential characteristics of accounting include identification and measurement.
_ 2. (L.O. 1) Financial accounting is the process that culminates in the preparation of financial reports on an
enterprise and that are used by both internal
CHAPTER 2 OUTLINE
(L.O. 1) Need for Conceptual Framework
(L.O. 2) Development of Conceptual Framework
(L.O. 3) First Level: Basic Objectives
Second Level: Fundamental Concepts
(L.O. 4) Qualitative Characteristics
_ 1. (L.O. 1) A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead
to consistent standards and that prescribes the nature, function, and limits of financial accounting and financial
_ 2. (L.O. 1
_ 1. (L.O. 1) Real (permanent) accounts are revenue and expense accounts and are periodically closed.
_ 2. (L.O. 2) In general, debits refer to increases in account balances, and credits refer to decreases.
_ 3. (L.O. 2) An example of an internal event wo
CHAPTER 4 OUTLINE
(L.O. 1) Usefulness and Limitations of the Income Statement
(L.O. 2) Format and content of the Income Statement
(L.O. 3) Prepare an Income Statement
Single-step Income Statement
Multiple-step Income Statement
(L.O. 4) Reporting Various I
_ 1. (L.O. 1) One of the limitations of the income statement is that items that cannot be measured reliably are not
reported in the income statement.
_ 2. (L.O. 3) The primary advantage of the single-step format lies in the simplicity of presentation and
_ 1. (L.O. 1) The balance sheet reflects a corporation's results of operations for a specified period of time.
_ 2. (L.O. 1) Liquidity is the ability of an enterprise to take effective actions to alter the amounts and timing of cash
flows so it can respon
CHAPTER 6 OUTLINE
(L.O. 1) Present Value-Based Accounting Measurements
Nature of Interest
(L.O. 2) Simple Interest
(L.O. 4) Fundamental Variables
(L.O. 5) Future Amount of a Single Sum
Present Value of a Single Sum
(L.O. 6) Future Amount
_ 1. (L.O. 1) Present value techniques can be used in valuing receivables and payables that carry no stated interest
_ 2. (L.O. 2) The amount of interest on a $1,000, 6%, 6-month note is the same as the amount of interest on a
$1,000, 3%, 1-year not
Average cost method.
An inventory costing method that assumes that the goods available for sale are homogeneous.
Goods shipped by a consignor who retains ownership to another party called the consignee.
Dollar-value LIFO method.
Expenditures on assets which increase or extend them.
The amount of interest cost during the period that theoretically could have been avoided if expenditures for the asset
had not been made.
*Accelerated Cost Recovery System (ACRS).
A tax depreciation method used for assets purchased in the years 1981 through 1986.
Activity method (variable charge approach).
A depreciation method in which depreciation is a function of use or productivity inst
CHAPTER 7 OUTLINE
(L.O. 1) Lower of Cost or Market Ceiling and Floor
(L.O. 3) Valuation Using Relative Sales Value
(L.O. 4) Purchase Commitments
(L.O. 5) The Gross Profit Method of Estimating Inventory
Computation of Gross Profit Percentage
(L.O. 6) The R
Characteristics include: (1) lack of physical existence, and (2) they are not a financial instrument.
Intangible assets with a foreseeable limit on the period of time over which the intangible assets are expect
CHAPTER 7 OUTLINE
(L.O. 1) Definition of Cash
Items Considered to be Cash
Items Considered to be Temporary Investments
Other Items Not Considered to be Cash
(L.O. 2) Reporting Cash
(L.O. 3) Definitions of t
CHAPTER 7 OUTLINE
(L.O. 1) Inventory Issues
Work in Process
(L.O. 2) Perpetual Inventory
Basic Issues in Inventory Valuation
Goods in Transit
Special Sales Agreements
Sales with Buyback Agree
A service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisionsin making reasoned choices among alter
A financial ratio used as a measure of shortterm liquidity; also called quick ratio.
The investment by stockholders in excess of the amounts assignable to capital stock as par or stated value, as
Statements that enable users to analyze performance over multiple periods and identify significant trends that might affect
A concept of income measurement and re
A record used to classify and summarize the effects of transactions.
A service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities that
is intended to
Trade receivables that are not evidenced by a formal agreement or note; accounts receivable are usually unsecured open accounts
and represent an extension of shortterm credit to customers.
The concept that a company expecting to have a series of hits to earnings in future years is better off to try to recognize all of the bad
news in one year, leaving future years unencumbered by continuing losses.
cost of capita