Shared Flashcard Set

Details

Accounting Final
n/a
65
Accounting
Undergraduate 1
05/16/2009

Additional Accounting Flashcards

 


 

Cards

Term
An entity is ________ and ________ from its owners.
Definition

1. seperate

2. distinct

Term

Entites classified by purpose are:

1.

2.

Definition

1. non-for-profit

2. for profit

 

Term

Entities classified by ownership are:

1.

2.

Definition

1. publicly held

2. privately held

Term

What are the advantages of a corporation?

(there are 6)

Definition
  1. seperate legal existance
  2. limited liability of stockholders
  3. transferable ownership rights
  4. ability to acquire capital
  5. continuous life
  6. corporate mangement
Term

The disadvantages of corporation

(there are 3)

Definition
  1. corporate management
  2. government regulations
  3. additional taxes
Term
What makes the Corporate balance sheet different than the balance sheet of other types of companies?
Definition
equity
Term
Other than regulatory cost what is another reason why companies don't want to go public?
Definition
Because there would be too many owners
Term
what is a charter?
Definition
permission from the state to be an incorporated business and issue shares
Term

What are the inital steps to forming a corporation?

(there are 3)

Definition
  1. file application with the secretary of state
  2. the state grants a charter
  3. the corporation develops by-laws
Term
Capital and equity represent what?
Definition
worth/value
Term
Two primary sources of capital and equity
Definition
  1. owner's investment
  2. net income
Term

What are the two ways a corporation can issue common stock?

(two ways)

Definition
  1. directly to investors
  2. indirectly through an investment banking firm
Term
par value
Definition
minimum of shares that should be set aside for liabilites
Term
what is one thing common stockholders get to do that preferred stockholders dont?
Definition

they get to vote

one vote per share

Term
when would a company stop issuing divideneds?
Definition
when there is negative retained earnigns
Term
why pay dividends?
Definition
to issue an incentive to get stockholders
Term

Paid in capital is the _______ by _______.

And it constists of what 3 things?

Definition

1. investment

2. owners

  • common stock
  • preferred stock
  • additional paid in capital
Term
What are the two primary sources of equity?
Definition
  1. paid in capital
  2. retained earnings
Term
IPO stands for what?
Definition
inital public offering
Term
outstanding stock
Definition
people have already purchased it
Term
When do companies make the journal entries for the stock?
Definition
the day that it became public...they dont change the numbers from what the IPO says
Term
Is retained earnings affected by the prior stock transaction?
Definition
no it deals with the incomes or loss
Term

What are features often associated with preferred stock?

(there are 3)

Definition
  1. preferences to dividends
  2. preference as to assets in liquidation
  3. non-voting
Term
retained earnings
Definition
net income that a company retains for the use in the business
Term
net income _______ retained earnings and a net loss _____ retained earnings
Definition
  1. increases
  2. decreases
Term
an increase in retained earnings is a ____ and a decrease in retained earnings is a _____.
Definition
  1.  credit
  2. debit
Term
A debit balance in retained earnings is identified as a ________.
Definition
decifit
Term
dividends
Definition
a distribution of cash or stock to stockholders on a pro rata basis
Term

how are dividends expresssed?

(2 ways)

Definition
  1. as a percentage of the par or stated value
  2. as a dollar amont per share
Term
In order for a corporation to pay a cash dividend what are the 3 things it must have?
Definition
  1. retained earnings
  2. adaquate cash
  3. a declaration of dividends
Term
what are the 3 dates for a dividend?
Definition
  1. declaration date
  2. record date
  3. payment date
Term
declaration date
Definition
it becomes a legal liability of the company; journal entry
Term
record date
Definition

no accounting entries

the "cut off" date to get a dividend

 

Term
payment date
Definition
the check is in the mail directly from the company
Term
SEC stands for?  and it can do what?
Definition

Securities exchange commission

 

can make companies go public

Term
the statement of financial position can also be called?
Definition
the balance sheet
Term
what is the financial performance determined by?
Definition
the revenue minus the expenses= net income
Term
the profit or loss statement that is equal to the income statement is what?
Definition
the revenues minus expenses = net income/loss
Term

Assets = what we ___

Liabilities = what we ___

Equity= _______

Definition
  1. own
  2. owe
  3. worth
Term

statement of financial analysis:

(three things)

Definition
  1. horizontal
  2. vertical
  3. ratio
Term
two uses of different accounting methods
Definition
  1. LIFO
  2. FIFO
Term
the annual report notes what?
Definition
whether LIFO or FIFO was used
Term
conglomerate
Definition
owns more than one company
Term
horizontal analysis
Definition

shows year to year comparison (increase or decrease)

 

shows trends, constant rises and falls

 

 most of info from balance sheet

Term
vertical anaylsis
Definition

way to compare to other companies/ourselves

 

all items expressed as a % of single, base item

 

most info comes from income statement

 

Term

ratio analysis

profit margin ratio

Definition
net income/ net sales
Term

5 uses of financial statement analysis

 

Definition
  1. individual investment and/or loan decision
  2. creditors/investors
  3. judge past performance
  4. analyze current position
  5. anticipate future potential and/or risk
Term

A comparison of financial statement items for a single company over a given period of time is called:

  1. horizontal analysis
  2. vertical analysis
  3. operational analysis
Definition
1.  horizontal analysis
Term

Assume you were concerned whether selling and administrative expenses were reasonable this year and given the level of sales. Which type of analysis would you perform to help address your concern?

  1. horizontal  analysis
  2. vertical analysis
  3. industry comparisons
  4. trend analysis
Definition
2. vertical analysis
Term
what does paid in capital mean?
Definition
the dollar amounts that came from owner investment
Term
what does retained earnings mean?
Definition
the income/loss of business operations
Term
when dividends are issued how many times a year are they usually offered?
Definition
quarterly
Term
What two things decrease from issuing dividends?
Definition
equity and cash
Term
what does the horizontal analysis show?
Definition
the study of % changes from year to year
Term
what does a vertical analysis show?
Definition
the relationship of a financial statement item to its base
Term
what is recievable turnover?
Definition
# of times that A/R is collected throughout the year which indicates the efficency to turn A/R into cash
Term
equation for debt ratio
Definition
total liabilities/ total assets
Term
What is the fundamental goal of a business?
Definition
to generate a profit
Term
What does gross profit margin mean?
Definition
For every dollar of sales revenue we generate so much (specific number) goes to profit, and the rest goes to COGS
Term
Equation for gross profit margin or gross margin
Definition
Sales minus COGS/Sales
Term

True or false

Dividends become a liablity of the corporation on the payment date

Definition
false
Term

True or false

When a corporation sells par value stock at an amount greater then par value, the additional income is reported on the income statement.

Definition
false
Term

True or false

A corporation pays federal and state taxes

Definition
true
Supporting users have an ad free experience!