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53 Cards in this Set

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Reporting the financial condition of a business at a point in time, and the changes in the financial condition of a business over a period of time are the two major objectives of
Financial accounting
A business strategy is an integrated set of plans and actions designed to enable the business to
Gain an advantage over competitors
Which of the following is an example of an intangible asset?
a. Patent
b. Cash
c. Land
d. Equipment
a. patent
What is the last part of the value chain sequence?
Customer value
Revenue
is (are) the increase in assets from selling goods or services.
Accounting is sometimes called the
Language of business
The portion of a corporation's net income retained in the business is called
Retained earnings
More than 70% of businesses are organized as what type of business?
Sole Proprietorship
A summary of the cash receipts and cash payments for a specific period of time is a(n)
Statement of cash flows
Under a differentiation strategy, a business designs products that possess __________, for which customers are willing to pay a premium price.
Unique Attributes
Financing activities involve obtaining __________ to operate a business.
funds
The best definition of assets is
Resources belonging to the company that are expected to benefit future operations
of the following is NOT an example of a capital market stakeholder?
a. Banks
b. Owners
c. Employees
d. Stockholders
c. Employees
Costs incurred in operating a business are also known as
expenses
When a business borrows from a vendor (supplier) the liability is called a(n)
Account payable
Zorro Corporation purchased a building for $80,000 cash. On the Statement of Cash Flows, this transaction would be classified as:
Cash Flows from Investing Activities.
Eagle Eye, Inc. a corporation, received an additional investment of $5,000 cash in exchange for shares of capital stock. How does this transaction affect Eagle Eye's accounts?
Increase capital stock and increase cash by $5,000 each
Under the accrual basis of accounting, transactions are recorded
Only when cash is received or paid
On June 1, Green Company purchased $1,200 worth of supplies on account.On December 31, Green determines that it has $700 of supplies on hand. What is the balance in the supplies account after adjustment?
$700
As prepaid insurance expires over time, the portion of the asset used becomes a(n)
expense
Accumulated depreciation is __________ to get the carrying or book value of the asset.
Subtracted from equipment
During September, Roane Co. received $4,000 from clients for services rendered and billed in a previous month. Which accounts will be affected and by what amounts
using the accrual basis of accounting?
Cash will increase by $4,000 and accounts receivable decrease by $4,000
Updating accrual accounting records prior to preparing financial statements is called
The adjustment process
Cash and other assets that are expected to be converted to cash or sold or used up within one year or less through the normal operations of the business are called
Current assets
An example of an accrued expense is
Interest accrued on a note payable
AirFlight Co. billed a client in February for flying lessons given in January. AirFlight
received the payment in March. Using accrual basis accounting, when should AirFlight record the revenue?
January
On April 1st, Thomas Company paid a $3,600 insurance premium on a three-year
insurance policy. This transaction
Increases prepaid insurance and decreases cash by $3,600 each
Accumulated depreciation is what type of account?
Contra asset
For EFG Co., the transaction "Purchase of store equipment with a note payable" will
Increase assets and increase liabilities
Which of the following statements is (are) true?
a. The effect of every transaction is an increase or a decrease in one or more the
accounting equation elements
b. The two sides of the accounting equation must always equal
c. Stockholders' equity is increased by amounts invested by stockholders
d. All are true
d. ALL ARE TRUE
Expenses that cannot be traced directly to operations are identified as
Other expenses
Which of the following is NOT an example of selling expenses?
a. Salespersons' salaries
b. Office salaries
c. Depreciation of store equipment
d. Advertising
b. Office salaries
merchandise is purchased to for sale to customers, the cost is recorded in
Merchandise Inventory
Merchandise with an invoice price of $5,000 is purchased subject to terms of 2/10, n/30,
FOB destination. Transportation costs paid by the seller totaled $125. What is the total cost of the merchandise?
$4,900
sale of $30,000 of merchandise on account would include a(n)
decrease in Merchandise Inventory
Quarles Company had $20,000 in beginning merchandise inventory at 1-01-05. They Purchase $215,000 dollars worth of merchandise. During
the year, the company sold goods costing $200,000 for $390,000 cash. What was its ending merchandise inventory balance?
$ 35,000
When purchases of merchandise are made for cash, the transaction
increases Merchandise Inventory; decreases Cash
FOB destination means
The seller is responsible for transportation costs
Compute conversion costs given the following data: Direct Materials, $247,800; Direct Labor, $183,400; Factory Overhead, $121,300.
$304,700
Recording direct labor costs in a job order cost accounting system will:
increase Work in Process and increase Wages Payable
Recording the cost of jobs shipped and customers billed will decrease
Finished Goods Inventory
Which of the following costs would not be classified as part of factory overhead
a. the cost of factory supplies used
b. the cost of depreciation on manufacturing equipment
c. the cost of production supervisors' salaries
d. the cost of direct labor used
the cost of direct labor used
Which of the following manufacturing costs is an indirect cost of producing a product

a. Oil lubricant cost used for factory machinery
b. Commission cost for sales personnel
c. Hourly wage cost of an assembly worker
d. Memory chip cost for a microcomputer manufacturer
Oil lubricant cost used for factory machinery
Selling and administrative costs are referred to as
period costs
The cost of a manufactured product generally consists of
direct labor cost, direct materials cost, and factory overhead cost
During May, Latimer Company purchased materials totaling $45,700. It issued $41,000 of
materials to production, identifying $37,000 of those as direct materials and $4,000 as indirect materials. The decrease to raw materials inventory in May will be
$41,000
If the amount of factory overhead cost incurred exceeds the amount applied, factory overhead costs have been
Underapplied
Factory overhead costs are applied to:
Work in process inventory
Which of the following is part of factory overhead cost?
a. Sales commissions
b. Depreciation of factory buildings
c. Depreciation of office equipment
d. Direct materials used
Depreciation of factory buildings
Costs that are treated as assets until the product is sold are called
product costs
What types of inventories does a manufacturing business report on its balance sheet?
raw materials inventory, work in process inventory, and finished goods inventory
Which of the following is an example of a direct materials cost for a furniture manufacturer?
a. Repairs and maintenance cost for the factory building
b. Factory heating and lighting cost
c. Cost of upholstery fabric sewing wages
d. Upholstery fabric cost
d. Upholstery fabric cost
During April, its first month of operations, Sounder Company recorded the following costs:

Direct materials $225,700
Indirect materials 9,200
Direct labor 124,900
Indirect labor 5,100
Other factory overhead 34,600

Sounder applies factory overhead to production at a rate of 40% of direct labor cost. It ended
the month of April with a balance of $120,000 in work in process inventory.
What is Sounder's cost of goods manufactured for April?
and
For April, Sounder's factory overhead was:
$280,560
and
overapplied by $1,060