Term
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Definition
| Money Spent on Business Acquisition-Value of Assets Received |
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Term
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Definition
| No change to Stockholder's Equity. Par Value and Share Price half. |
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Term
| Journal Entry for issuance of common stock |
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Definition
| Debit Cash, Credit Common Stock (Par) and Additional Paid In Capital-Common Stock |
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Term
| Statement of Cash Flow-Operating Activities |
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Definition
Cash inflow:
From Sale of goods or services
from interest received and dividends received
Cash Outflows:
to suppliers for inventory
to employees for services
to government for taxes
to lenders for interest
to others for expenses
p. 604 |
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Term
| Statement of Cash Flow-Investing Activities |
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Definition
Cash inflow:
from sale of property, plant and equipment
from sale of investments in debt or equity securities of other entities
from collection of principal on loans to other entities
Cash outflows:
to purchase property, plant, and equipment
to purchase investments in debt or equity securities of other entities
to make loans to other entities
p. 604 |
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Term
| Statement of Cash Flow-Financing Activities |
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Definition
Cash inflow:
From sale of common stock
from issuance of debt (bonds and notes)
Cash outflows:
to stockholders as dividends
to redeem long-term debt or reacquire capital stock (treasury stock)
p. 604 |
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Term
| What does Stockholder's Equity Consist of? |
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Definition
| Contributed Capital (Common Stock) and Retained Earnings |
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Term
| Statement of Stockholder's Equity |
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Definition
Separate columns for Common Stock and Retained Earnings.
Common Stock items=balance+issuance-repurchase.
Retained Earnings items=balance+net income-dividends |
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Term
| Statement of Retained Earnings |
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Definition
Beg retained earnings
add: net income
less: dividends
= Ending Retained Earnings |
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Term
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Definition
| (Capital Stock (Par)+Additional Paid in Capital)/# of shares outstanding |
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Term
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Definition
| (Net Income-Preferred Stock Dividends)/ Average common shares outstanding |
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Term
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Definition
Interest > Yield
(Contractual interest rate is greater than market interest rate) |
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Term
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Definition
Interest < Yield
(Contractual interest rate is less than market interest rate) |
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Term
| Cash from operations: Indirect Method |
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Definition
Adjusts Net Income for items that do not affect Cash:
Cash flow from operating activities=
Net income
(adjustments:)
+depreciation expense
+loss on sale of equipment
+decrease in accounts receivable
-increase in merchandise inventory
-increase in prepaid expenses
+increase in accounts payable
-decrease in income taxes payable |
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Term
| Indirect Method Summarized |
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Definition
Noncash charges:
add depreciation expense
add patent amortization expense
gains and losses:
add loss on sale of plant asset
deduct gain on sale of plant asset
changes in current assets and current liabilities:
deduct increase in current asset
add decrease in current asset
add increase in current liability
deduct decrease in current liability |
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Term
| Cash from operations: Direct Method |
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Definition
Cash Receipts-Cash Payments=Net cash provided by operating activities
Cash flows from operating activities:
Cash receipts from customers
less: cash payments:
to suppliers
for operating expenses
for income taxes
for interest expense
=Net cash from operating activities |
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Term
| Direct Method: Cash receipts from customers |
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Definition
Revenues from sales
+decrease in accounts receivable
or
-increase in accounts receivable |
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Term
| Direct Method: Cash payments to suppliers |
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Definition
cost of goods sold
+increase in inventory
or
-decrease in inventory
+decrease in accounts payable
or
-increase in accounts payable |
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Term
| Direct Method: Cash payments for operating expenses |
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Definition
Operating Expenses
+increase in prepaid expenses
or
-decrease in prepaid expenses
+decrease in accrued expenses payable
or
-increase in accrued expenses payable |
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Term
| Cash payments for income taxes |
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Definition
Income tax expense
+decrease in income taxes payable
or
-increase in income taxes payable |
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Term
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Definition
cash remaining from operations after adjustment for capital expenditures and dividends
Free Cash Flow=
Cash provided by operating activities
less: expenditures on property plant and equipment
less: dividends paid |
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Term
| Journal Entry for Purchase of Treasury Stock |
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Definition
Debit Treasury Stock
Credit Cash |
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Term
| Journal Entry for resale of treasury stock |
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Definition
Debit Cash
Credit treasury stock for original price
Debit/Credit Paid in capital (treasury stock) for the balance
*Debit Retained Earnings if add paid in capital (treasury stock) falls below 0. |
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Term
| Journal Entry for a stock Dividend |
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Definition
Debit Retained Earnings
Credit Common stock at par
and additional paid in capital |
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Term
| Medland Corp has a balance of 300000 in RE and declares a 10% stock dividend on its 50000 shares of 10$ par value common stock. The current fair market value of its stock is $15 per share. Write the journal entry. |
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Definition
debit retained earnings 75000
credit common stock 50000
credit add paid in capital 25000 |
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Term
| Cost of acquiring a plant asset |
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Definition
| all expenditures necessary to place it in operation |
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Term
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Definition
| The process of allocating the cost of an asset to expense over its useful life |
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Term
| Depreciation Expense (straight-line) |
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Definition
| (cost-salvage)/useful life |
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Term
| Compute Gain/Loss on sale of plant asset |
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Definition
| sale price-Book value=Gain on sale (if negative, loss on sale) |
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Term
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Definition
| Cost-Accumulated Depreciation |
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Term
| Define the characteristics of a liability that is recorded |
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Definition
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Term
| Current Liabilities (examples) |
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Definition
| Notes Payable, Sales Tax Payable, Unearned Revenues, Current Maturities of Long-Term Debt, Payroll and payroll taxes payable |
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Term
| Long-Term Liabilities (example) |
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Definition
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Term
| Journal Entries for Payroll |
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Definition
Debit Salaries and Wages Expense
Credit FICA (Social Security) taxes payable
credit Medicare payable
credit federal income taxes payable
credit state income taxes payable
credit salaries and wages payable
Then
Debit Salaries and Wages Payable
Credit Cash |
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Term
| Journal Entries for Payroll Taxes |
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Definition
Debit Payroll Tax Expense
Credit Matching FICA (Social Security) payable
credit Matching Medicare payable
credit Federal unemployment taxes payable
credit state unemployment taxes payable |
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Term
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Definition
Sales
less: sales returns and allowances
less: sales discounts |
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Term
| Draft journal entry for uncollectible accounts adjustment at year end, aging method |
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Definition
Debit Bad debts expense
credit allowance for doubtful accounts
% increases as days past due increases |
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Term
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Definition
1) vote for board of directors and actions that require approval
2) receive dividends
3) keep the same percentage ownership when new shares are issued
4) share in assets upon liquidation in proportion to their holdings (residual claim) |
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Term
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Definition
| Beginning Inventory+Purchases-Ending Inventory |
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Term
| Journalize a warranty estimate and subsequent repair |
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Definition
Estimate:
Debit warranty expense
Credit warranty liability
Repair:
Debit warranty liability
Credit cash |
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Term
| Journal entry for sale with discount |
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Definition
Debit Cash
Debit Sales Discount
Credit Accounts Receivable |
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Term
| Journal entry for merchandise inventory purchase with discount (perpetual inventory system) |
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Definition
Debit Accounts Payable
Credit Cash
Credit Merchandise Inventory (discount) |
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Term
| Journal entry for merchandise inventory purchase with discount (periodic inventory system) |
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Definition
Debit Accounts Payable
Credit Cash
Credit Purchase Discounts |
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Term
| Journal entry for declaration, record, and payment of dividends for $50000 |
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Definition
Declaration:
Debit cash dividends 50000
Credit Dividends payable 50000
Record:
No entry necessary
Payment:
Debit Dividends Payable 50000
Credit Cash 50000
p. 565 |
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Term
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Definition
| Seller pays the Freight Costs (Ownership passes to buyer at destination) |
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Term
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Definition
| Buyer pays the freight costs (Ownership passes to buyer at shipping) |
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Term
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Definition
| Hold the goods of another party and charge a fee to sell it. (Example: Used Car Lot) |
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Term
| Journal Entry to write-off uncollectible account |
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Definition
Debit Bad Debts Expense (If direct)
or
Debit Allowance for Doubtful Account
Credit Accounts Receivable |
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