Accounting 211 Test 2

Front 1

A debit balance account that is offset against revenue int he income satement. Ex in sales discounts and sales return and allowances

Back 1

Contra-revenue account

Front 2

a general ledger account that summarizes the content of a specific subsidiary ledger

Back 2

control account

Front 3

the cost to a merchandising company of the goods it has sold to its customers during the period.

Back 3

cost of good sold

Front 4

net sales revenue minus the COGS

Back 4

gross profit

Front 5

merchandise intended for resale to customers

Back 5

inventory

Front 6

the loss of merchandise through such causes as shoplifting, breakage and spoilage

Back 6

inventory shrinkage

Front 7

gross sales revenue less sales returns and allowances and sales discounts. the most widely used measure of dollar sales volume; usually the first figure shown in an income statement

Back 7

net sales

Front 8

the repeating sequence of transactions by which a business generates its revenue and cash recepits from customer

Back 8

operating cycle

Front 9

a system of accounting for merchandising transactions in which the inventory and COGS accouns are kept up to date

Back 9

perpetual inventory system

Front 10

electronic cash registers used for computer-based processing of sales transactions

Back 10

point of sale terminals

Front 11

an accounting record or device designed for recording large numbers of a particular type of transaction quickly and efficiently

Back 11

special journal

Front 12

a ledger containing separate accounts for each of the items making up the balance of a control account in the general ledger. the total of the account balances in a ____ ledger are equal to the balance in the general ledger control account

Back 12

subsidiary ledger

Front 13

a ratio used to measure the liquidity of A/R and the reasonableness of the A/R balance. computed by dividing net sales by average receivables.

Back 13

accounts receivable turnover rate

Front 14

the process of classifying accounts receivable by age groups such as current, 1-30 days pas due. a step in estimating the uncollectible portion of the accounts receivable.

Back 14

aging the accounts receivable

Front 15

a valuation account or contra-asset account relating to accounts receivable and showing the portion of the receivables estimated to be uncollectible

Back 15

Allowance for Doubtful Accounts

Front 16

an analysis that explains the difference between the balance of cash shown in the bank statement and the balance of cash shown in the depositor's records.

Back 16

bank reconciliation

Front 17

very short-term investments that are so liquid that they are considered eequivalent to cash. exs money market funds, U.S. treasury bills

Back 17

cash equivalents

Front 18

planning, controlling, and accounting for cash transacitons and cash balances

Back 18

cash management

Front 19

a minimum average balance that a bank may require a borrower to leave on deposit in a non-interest-bearing account

Back 19

compensating balance

Front 20

failure to pay interest or principal of a promissory note at the due date

Back 20

defualt

Front 21

a method of accounting for uncollectible receivables in which no expense is recognized until individual accounts are determined to be worthless

Back 21

direct write off method

Front 22

transactions in which a business either sells its accounts receivalbe to a financial institution or borrows money by pledging its accountss receivalbe as collateral.

Back 22

factoring

Front 23

cash and assets convertible directly into known amounts of cash

Back 23

financial assets

Front 24

a prearranged borrowing agreement in which a band stands ready to advance the borrower without delay any amount up to a specified creadit limit

Back 24

line of credit

Front 25

highly liquid investments, primarily in stock and bonds, that can be quoted market prices in organized securities exchanges

Back 25

marketable securities

Front 26

the balance sheet valuation standard applied to invesments in marketable securities. involvles adjusting the ocntrol account for securities owned to it toal market value at each balance sheet date

Back 26

mark-to-market

Front 27

the date on which a note becomes due and payable

Back 27

maturity date

Front 28

the balance sheet valuation standard applied to receivables. equal to the gross amount of accounts and notes receivables, less an estimate of the portion that may prove to be uncollectible

Back 28

net realizable value

Front 29

a customer's check that was deposited but not returned because of a lack of funds in the account on which the check was drawn

Back 29

NSF check

Front 30

a stockholders equity account representing the difference between the cost of investments owned and their market value at the balance sheet date. in short gains or losses on these investments that have not been realized through the sale of the securities

Back 30

Unrealized Holding Gain (or Loss) on Investments

Front 31

asumption as to the sequence in which units are removed from inventory for the purpose of sale.

Back 31

cost flow assumption

Front 32

units of merchandise acquired at the same unit cost. an inventory comprised of several cost layers is characteristic of all inventory valuation mehtods except average cost

Back 32

cost layer

Front 33

the cost of merchandise expressed as a percentage of its retail selling price.

Back 33

cost ratio

Front 34

a method of computing the cost of inventory and the COGS based on the assumption that the first merchandise acquired is the first merchandise sold and that the ending inventory consists of the most recently acquired goods

Back 34

FIFO

Front 35

a term meaning the seller bears the cost of shipping goods to the buyers location

Back 35

FOB destination

Front 36

the buy of goods bears the cost of transportation from the sellars location tot he buyers location

Back 36

FOB shipping point

Front 37

a method of estimating the cost of the ending inventory based on the assumption that the rate of gross profit remains approximately the same from year to year

Back 37

gross profit method

Front 38

the COGS divided by the average amount of inventory. indicates how man times the average inventory is sold during the course of a year

Back 38

inventory turnover

Front 39

a method of computing the COGS by use of the prices paid for the most recently acquired units.

Back 39

LIFO

Front 40

a theod of inventory pricing in which goods are valued at original cost or replacement cost (market), whichever is lower

Back 40

LCM rule

Front 41

method of valuing all units of inventory at the same average per-unit cost, recalculating this cost after each purchase. this method is used in a perpetual inventory system

Back 41

moving average method

Front 42

method of estimating the COGS and ending inventory, the cost ratio is based on current cost-to-retail price relationships that than those of prior years

Back 42

retail method

Front 43

losses of inventory resulting from theft, spoilage, or breakage

Back 43

shrinkage losses

Front 44

recording as the COGS the actual costs of the specific units sold. necessary if each unit in inventory in unique, but not if the inventory consist of homogeneous products

Back 44

specific identification

Front 45

a reduction in the carrying amount of an asses because it has become obsolete or its usefullness has otherwise been impaired.

Back 45

write-down

Front 46

methods of depreciation that call for recognition fo relatively large amounts of drpreciation in the early years of an assets useful life and relatively small amounts in the later years

Back 46

accelerated depreciation

Front 47

the systematic write-off to expense of the cost of an intangible asset over the periods of its economic usefulness

Back 47

amortization

Front 48

the cost of a plant asset nimus the total recorded depreciation, as shown by the accumulated depreciation account

Back 48

book value

Front 49

cost incurred to acquire a long-lived asses. expenditures that will benefit several accounting periods

Back 49

capital expenditures

Front 50

allocating the cost of a natural resource to the units removed as the resource is mined, pumped, cut...

Back 50

depletion

Front 51

the systematic allocation of the cost of an assest to expense over the years of its estimated useful life

Back 51

depreciation

Front 52

an accelerated method of depreciation in which the rate is a multiple of the straight-line rate and is applied each year to the undepreciated cost of the asset.

Back 52

fixed-percentage-of-declining-balance depreciation

Front 53

the present value of expected furture earnings of a business in excess of the earnings normally realized in the industry. recored when a business entity is purchased at price in excess of the fair value of its net identifiable assets less liabilities

Back 53

goodwill

Front 54

the practice of taking six month's depreciation in the year acquisition and in the year of disposition, rather than computing deprciation for partial periods to the nearest month

Back 54

half-year convention

Front 55

writing down a long-lived asset for the difference between its carrying amount less its fair value

Back 55

impairment loss

Front 56

those assets that are used in the operation of a business but have no physical substance and are noncurrent

Back 56

intangible assets

Front 57

the accelerated depreciation method permited in federal income tax returns for assets aquired after december. depreciation is based on prescribed recovery periods and depreciation rates.

Back 57

MACRS

Front 58

total of all assets minus liabilities

Back 58

net identifiable assets

Front 59

a charge against earnings-either an expense or a loss-that does no require a cash expenditure at or near the time of recognition

Back 59

noncash charge or expense

Front 60

long lived assets that are acquired for use in business operations rather than for resale to customers

Back 60

plant assets

Front 61

the portion of an assets cost expected to be recovered through sale or trade in of the asset at the end of its useful life

Back 61

residual value

Front 62

expenditures that will benefit only the current accounting period

Back 62

revenue expenditures

Front 63

a method of depreciation that allocates the cost of an asset (minus any residual value) equally to each year of its useful life

Back 63

straight-line depreciation

Front 64

plant assets that have physical substance but that are not natural resources. ex landd building

Back 64

tangible plant assets

Front 65

a depreciation method in which cost (minus residual value) is divided by the estimated units of lifetime output. the unit depreciation cost is multiplied by the actual units of output each year to compute the annual depreciation expense

Back 65

units of output