# Shared Flashcard Set

## Details

accounting final exam
accounting final exam
61
Accounting
12/09/2012

## Additional Accounting Flashcards

Term
 how to calculate net receivable?
Definition
 = accounts receivable - allowance for doubtful accounts
Term
 preferred stock
Definition
 a different class of ownership shares where the dividend is fixed
Term
 what are the components of stockholder's equity?
Definition
 a. retained earningsb. dividends paidc. treasury stock
Term
 what are retained earnings??
Definition
 profits from the business that havent been distributed to the owners
Term
 What is the effect of the LIFO method?
Definition
 reduces ending inventory and increases COGS weighted average
Term
 how to calculate the average unit cost using the average cost method
Definition
 total cost of units available for sale/ units available for sale
Term
 how to calculate inventory
Definition
 = cost of goods sold/ average inventory
Term
 how to calculate average inventory
Definition
 =(beginning inventory + ending inventory) / 2
Term
 How do you calculate the earnings per share
Definition
 = net income/ average number of shares outstanding per period
Term
 how to calculate depreciation using the straight line method
Definition
 = (cost-residual value)/life in years
Term
 how to calculate depreciation using the units of production method?
Definition
 A. = (cost-residual value)/ life in units of productionB. = Depreciation rate * number of units produced for the year
Term
 how to calculate depreciation using the accelerated method
Definition
 double the straight line rate.= net book value * (2/useful life in years)
Term
 how to calculate depletion rate
Definition
 =(Aquisition and development cost - residual value)/estimated receivable units
Term
 what are the two types of depreciation
Definition
 physical depreciation and functional depreciation
Term
 what is functional depreciation? physical?
Definition
 physical: factoes include wear and tear during use or from exposure to the weatherfunctional: changes in customer needs that cause the asset to no longer produce services
Term
 what are the three factors in calculating depreciation
Definition
 A. acquisition cost (what did it cost)B. how long will it functionC. scrap value
Term
 What are the common methods of depreciation?
Definition
 A. Straight lineB. Units of productionC. Accelerated method/ declining balance
Term
 What are intangible assets?
Definition
Term
 What are fixed assets?
Definition
 tangible assets are owned and used by the company in its normal operations
Term
 What is the difference between period and capital expenditures
Definition
 period expense is a normal and ordinary repair that does not prolong the useful life of the assetcapital expenditure: additions, improvements
Term
 What is depreciation?
Definition
 periodic recording of the cost of fixed assets as an expense
Term
 What is auditing?
Definition
 financial accountant is an external accountant who makes sure the company is providing accurate and compile info through auditing
Term
 what is meant by the matching concept
Definition
 match related expenses and revenue within the correct time period
Term
 notes receivable
Definition
 amounts that customers owe for which a formal, written instrument of credit has not been issued
Term
 how do you calculate the bad debt expense
Definition
 =sales * % of bad debts
Term
 which bad debt expense recording method is not permissable
Definition
 direct write off method
Term
 the term management accounting refers to ____
Definition
 internal accountants that provide internal managers with management or operational information
Term
 debit where its coming from
Definition
 credit where it is going
Term
 what is a prepaid asset
Definition
 an asset that the company has not yet benefitted from. Neither an expense or revenue (insurance)
Term
 What are the advantages of elctronic funds transfer
Definition
 A. employees do not handle cashB. funds received can be spent immidiatelyC. Fewer customers pay bills lateD. EFT funds can be processed more quickly
Term
 what is the purpose of a statement of cash flows?
Definition
 to disclose :transactions that are not clearhow much cash came in during a periodwhere the cash came from and where it was spent
Term
 what is the purpose of preforming a bank reconcilliation
Definition
 ensure that the companys cash balance is complete and accurate
Term
 What are part of a statement of cash flow?
Definition
 cash from operationssources and uses of cash from financing activitiessources and uses of cash of investing activities
Term
 is par value a requirement in the US
Definition
 No, only some states require it
Term
 when must a company journalize a liability to pay its next dividend payment to shareholders
Definition
 dividend decleration date
Term
 what effect does a stock dividend have on the market price
Definition
 the market price of common stock will decline at first
Term
 what are the factors used in computing gross profit
Definition
 sales, sales returns, opening inventory, materials cost, labor costs, and direct overhead
Term
 when should a company disclose a potential loss in the footnotes? when should it be journalized
Definition
 footnotes - when a lawyer says that a loss is probablejournalized- when it is probable and the amount is estimatable
Term
 What is treasury stock
Definition
 stock that a company has repurchased and it is not unissued stock
Term
 what are the components of stockholders' equity?
Definition
 a. common stockb. paid in capitalc. retained earnings
Term
 what is the par value of common stock?
Definition
 price of the common stock that is included in the corp. articles of incorporation. Not neccesarily the price that investors must pay when they buy comapny stock
Term
 what are the typical sources of corporate capital
Definition
 long term bank loannet incomeequity capital
Term
 what is a long term liability
Definition
 money owed by the company that must be paid to vendors, etc. Lasting longer than a year
Term
 what are the intergral parts of a financial statement
Definition
 statement of income, statement of financial position (balance sheet), statement of cash flow, footnotes and auditors report
Term
 what are the differences between an operating lease and a capital lease
Definition
 capital lease make the transaction closely resemble a purchase while an operating lease resembles more of a rental
Term
 which inventory method is most likely to produce the highest ending inventory
Definition
 first in- first out method
Term
 what is the FIFO methods impact on gross profit?
Definition
 gross profit would increase
Term
 which concept of bad debts is permissable for use in financial reporting
Definition
 allowance for doubtful accounts or bad debt provision method
Term
 what are current liabilities
Definition
 money owed by the company that the company miust pay within a year
Term
 cost of goods sold for manufacturing companies is reported in financial statements
Definition
 DOLLAHS
Term
 what are goods available for sale
Definition
 good produced during the year plus inventory
Term
 what is the calculation for cost of goods sold
Definition
 = open inventory + cost of production - closing inventory
Term
 what are the five C's of credit
Definition
 character, capacity, capital, collateral, conditions
Term
 explain the relationship of character as it pertains to credit
Definition
 the borrower's willingness to pay based on their payment history
Term
 explain the relationship of capacity as it pertains to credit
Definition
 the borrowers likeliness to pay based on prediction of their future income
Term
 explain the relationship of capital as it pertains to credit
Definition
 how much money the borrower has to fall back on
Term
 explain the relationship of collateral as it pertains to credit
Definition
 what the lender gets if the borrower fails to pay
Term
 what is the calculation for computing gross profit
Definition
 sales- COGS
Term
 what are footnotes
Definition
 need to be included in the financial statement though there are no rules clarifying the specificity of them. Used to keep statements from being misleading and to report any occurences that have appened betweent he time of the statement and its release
Term
 if an asset is said to be "liquid" what must it be
Definition
 able to be quickly sold in a readily availble market at the intended price (no significant loss)
Term
 what is a classified balance sheet
Definition
 current and long term assets and liabilities are segregated
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