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Accounting Test Last
accoutning
52
Accounting
Undergraduate 1
04/26/2013

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Term
Maturity on Current Liabilities
Definition
1 year or less
Term
Maturity on Noncurrent Liabilities
Definition
More than 1 year
Term
Current Liabilites
Definition
Short-term obligations to suppliers for purchases of merchandise and to others for goods and services.
Term
Examples of Liabilities
Definition
Merchandise Inventory Invoices

Office Supplies Invoices

Shipping Charges

Utility and Phone Bills
Term
Unearned Revenue
Definition
Cash that is collected from a customer before revenue is actually earned.
Term
Longterm Liabilities
Definition
Liabilities that will have future benefits over 1 year
Term
Examples of Longterm Liabilites
Definition
Notes payable that are longer than 1 year
Term
Mortgage Bonds
Definition
The issuer pledges specific assets as collateral.
Term
Debenture Bonds
Definition
Backed by the issuers credit outstanding
Term
Convertible Bonds
Definition
can be exchanged for a fixed number of common shares of the issuing corportation
Term
Junk Bonds
Definition
High risk
Term
Callable Bond
Definition
Able to redeem a bond before its maturity date
Term
Bond Sinking Fund
Definition
a way of reducing debt
Term
Compute: Cash Interest Payments
Definition
Principle X Rate X Time = Interest

I = PRT
Term
Compute: Bond issued at a discount
Definition
Principle - Cash Proceeds = Discount

P - C = D
Term
Record Bonds Issued at a Discount
Definition
Debit Cash
Debit Discounts on Bonds Payable
Credit bonds Payable
Term
Bonds issued at a premium`
Definition
greater than face amount
Term
Bonds issued at a discount
Definition
lower than face amount
Term
Carrying Value of a Bond
Definition
Discount Subtracted from principle amount.

Carrying value increases to its face value on the maturity date.
Term
What are the effects of a stock split?
Definition
Outstanding shares increase
par value decreases

stockholders equity DOES NOT change

market price will decrease
Term
Compute: Earnings Per Share
Definition
EPS = Net Income - Preferred Dividends
______________________________________

average number of common shares
Term
Computer: Retained Earnings
Definition
Net Income - Dividends = RA
Term
Revenue
Definition
Debit - increase in assets as result from normal operations of business
Term
Expenses
Definition
Debit - Decrease in assets from normal operation of business
Term
Gains
Definition
Debit - Increase in assets NOT related to normal operation of business
Term
Losses
Definition
Credit - Decrease in assets NOT related to normal operations of business
Term
Dividends in arrears
Definition
Dividends to cumulative preferred shareholders that have not been paid. They are NOT a liability and are disclosed in the notes to financial statements.
Term
Noncumulative Preferred Stock
Definition
If dividends to preferred shareholders are not paid for any given year, the dividends are foregone.
Term
Market Value
Definition
a value that isn't par value (face value)
Term
Par Value
Definition
Face Value
Term
Cumulative Preferred Stock
Definition
If dividends are not paid for one or more years, the dividends accumulate. When distributed the dividends have to go to the preferred shareholders.
Term
Outstanding shares
Definition
Issued shares - Treasury Shares
Term
Treasury Shares
Definition
Shares that were initially issued to shareholders but the company later repurchased
Term
Authorized Shares
Definition
Max shares the company can sell to the public
Term
Characteristics of Preferred Stock
Definition
Preferred holders have preference over common stock holders in payment of dividends

Preferred stock holders do not vote to elect members of the BoD.
Term
How to record declaration of a small stock dividend
Definition
Debit Retained Earnings
Credit Common Stock to be Distributed
Credit Addition Paid-in Capital Stock Dividend
Term
Journal Entry for "Stock issuance for organication expense and assets or buildings"
Definition
Debit: Organization expense
Credit: Common Stock
Credit: Additional paid in capital
Term
Journal Entry for "Stock issuance for cash"
Definition
Debit: Cash
Credit: Common Stock
Term
Discontinued Operations(net of tax)
Definition
When a company is getting rid of a section of business
Term
Extraordinary items (net of tax)
Definition
Unusual in nature
Infrequent in occurance
Term
Net Income
Definition
Income from operations before income taxes - Income Tax expense = Net Income
Term
Journal Entry for Declaration of Cash Dividend
Definition
Debit: Dividends
Credit: Dividends Payable
Term
Journal Entry to record payment of cash dividend
Definition
Debit: Dividends Payable
Credit: Cash
Term
To record declaration of small stock dividend
Definition
Debit: Retained EArnings
Credit: Common stock to be distri.
Credit: Additional paid in capital
Term
To record payment of small stock dividend
Definition
Debit: Stock to be distributed
Credit: Common Stock
Term
Two dates that are important when recording dividends.
Definition
The date the stock dividend is declared.

The date the stocks are distributed to shareholders.
Term
Journal Entry for reissuing treasury stock.
Definition
Debit: Cash
Debit: Add. paid in capital
Credit: Treasury Shares
Term
Journal Entry for reissuing treasury stock above cost.
Definition
Debit: Cash
Credit: Treasury Stock
Credit: Add. paid in capital
Term
Issuance of common stock to acquire land.
Definition
Debit: Land
Credit: Common Stock
Credit: Additional paid in capital
Term
What are the board of directors?
Definition
Stockholders
Term
Net Sales
Definition
Sales Revenue - Sales Discounts - Sales REturns and Allowances
Term
Gross Profit
Definition
Net sales - Costs of goods sold
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