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65 Cards in this Set

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  • Back
A bond that can be bought back before maturity
Callable Bond
A bond only backed by good faith
Debenture Bonds
Two major accounting subjects are
Managerial and Financial
What could be included in cost of goods sold?
Transportation cost
When costs decrease
LIFO tax exceeds FIFO
Dividends are
subtracted from long term investment.
Accountants have
developed principles
When a customer returns merchandise
assets decrease and equity decreases
trial balance is
not the same as balance sheet
amoritization is straight line, what is interest expense?
remains constant
Three-Fourths into the year, what is on balance sheet?
inventory on hand at that date
when sale price exceeds cost of treasury stock
credit contributed capital, treasury stock
goodwill occurs when
sale price exceeds market value
Premium recieved in advance is classified as
liability
when you recognize revenue of a premium paid in advance
liability goes down and equity goes up
market adjustment for gains and losses on AFS
goes to balance as unrealized gains and losses
market adjustment for trading securities
goes to income statement
financial statements are made for
investors and lenders
sales returns and allowances, products sold more than cost
assets decrease, equity decreases
monetary unit principle
the reason we use the dollar
which is included in cost of good sold
shipping
which one violates the matching principle
insurance paid for next year is recorded
when shrinkage occurs what is effect on the acct. equation?
assets decrease and equity decreases
FASB
sets the GAAP
Common stock in accounts payable
have some amounts of debits and credits
example of an extraordinary item is
government condemnation of anything
which is not a type of investing activity
bonds
ending inventory overstated then
COGS understated and Net income overstated
when is there a factoring fee
when you sell a notes recievable
which is an investing activity
equipment, plant assets, securities, collecting principals on loans
which is a financing activity
-issuing bonds and notes
-payments of dividends
-stock
-purchase treasury stock
which is operating activity
-interest
-recieving dividends
-taxes
-sales
consolidated financial statements are used only when
a company owns 50% or more of a company
contingent liabilities that can be estimated and are reasonably possible goes on
notes on financial statements
dividends in arrears goes under
disclosed under notes
advantage of using a bond is
bond interest expense is tax deductible
accrued refers to an event that
transaction where cash has not been exchanged
when customers pay within the discount period
debit cash, debit discount, and credit accounts receivable
Fun Company purchases a machine for $18,000 on credit, and a month later makes a partial payment of $10,000 for
the machine. The overall result of the 2 transactions combined will cause:
Total Liabilities to increase by $8,000
If the liabilities of a business increased $92,000 during a period and the assets in the business increased $30,000 during the same period, the equities of the business must have:
Decreased $62,000
An internet retailer received an order from a customer on December 28, 2004, and shipped the merchandise on
January 2, 2005. If the company’s 2004 income statement included proceeds from this sale, which accounting principle was violated?
Revenue Recognition principle
Which of the following will not cause a trial balance to be out of balance?
A credit entry is posted to the wrong account as a credit.
Which pair of accounts has the same set of rules for debit and credit entries?
Common stock and Unearned Revenue
Henry Ford, a truck dealership, sells new trucks and pays each salesperson a commission of $2,000 for each truck sold. During the month of August 2005, a salesperson, Katrina, sold 3 new trucks. Henry Ford pays Katrina on the
10th day of the month following the sale. Katrina operates on the cash basis; Henry Ford operates on the accrual basis. Which of the following statements is true
Henry Ford will recognize commission expense in the amount of $6,000 in August.
The monthly payroll amount for Duffy Company is $100,000, and employees are paid the 15th day of every month. The last payday in 2004 was December 15th. If the accountant (NOT a UGA graduate) forgets to make the required adjusting entry on December 31, 2004 (the end of the accounting period), which of the following will be true for
Duffy’s 2004 financial statements?
Total Equity will be overstated by $50,000
Athens Fitness Center has 15,000 members in Athens whose monthly dues are $30 each. Athens Fitness does not
send individual bills to customers, who have until the 10th day of the following month to pay their monthly dues. On December 31, 2005, Athens Fitness’ records show that 6,000 customers have already paid their December dues. The adjusting entry to be recorded by Athens Fitness on December 31, 2005 will include
A debit to Accounts Receivable of $270,000
If a customer pays after the discount period, what is the seller's economic effect when they receive the payment?
There is no effect.
The seller’s journal entry to record a sales return (which is restored to inventory) would consist of:
Debits to Sales Returns and Allowances and Inventory and Credits to Accounts Receivable and Cost of Goods Sold
On January 15, Peach Wholesale Company (the seller) sold 100 cases of peaches to Kroger Company (the buyer) for $10 per case with terms of 2/10, n/30. On January 18, Kroger returned 20 cases of rotten peaches to Peach
Wholesale Company and received immediate credit. Peach Wholesale Company disposed of the rotten peaches. On January 22, Kroger Company paid Peach the amount due. Given this information, Peach’s journal entry on January 22 will include:
A credit to Accounts Receivable of $800
If ending inventory for the year ended December 31, 2004, is overstated by $25,000:
net income for 2005 will be understated by $25,000
When inventory prices are falling, using the LIFO costing method will generally result in a
lower cost of goods sold than under FIFO
If a company uses the allowance method to account for bad debts, when will the company's owners' equity decrease
At the end of the accounting period when an adjusting entry for bad debts is recorded
When a company uses the direct write-off method of accounting for bad debts
it will record bad debts only when an account is determined to be uncollectible.
Red Sox Company accepts VISA and MasterCard for payments of purchases made by customers. The credit card
drafts are deposited electronically in a bank account, and cash is received immediately on deposit. If a 3% collection
fee is charged by VISA and MasterCard, and credit card sales totaling $10,000 are recorded, the entry to record the sales and deposits will include
a debit to Credit Card Expense for $300.
Yankees Company received a promissory note from a customer on November 1, 2005. The face value of the note is
$8,000; the terms are 90 days and and the note carries 9% interest. The company’s accounting period ends on December 31. The journal entry on the books of Yankees Company on the maturity date will include a:
Credit to Interest Receivable $120
Angels Company traded an old delivery truck plus a cash payment of $35,000 for a new delivery truck. The old truck
had originally cost $30,000, and straight-line accumulated depreciation of $24,000 had been recorded as of the
exchange date under the assumption it would last ten years. The new delivery truck has a market value of $45,000. Angels Company’s journal entry in recording the exchange would include
Credit to Delivery Truck (Old) for $30,000
Where do gains or losses on sales of long-term assets appear in the financial statements?
On the income statement, under Other gains and losses
A $1,000 expenditure (paid in cash) was mistakenly treated as a capital expenditure, instead of as a revenue
expenditure. As a result,
The Net Income for the period will be higher by $1,000
On December 1, 2005, Augusta Company purchased $15,000 of equipment by issuing a 120-day, 10% note payable
to Bank of Georgia. The journal entry recorded by Augusta Company on the note maturity date will include:
Debit to Interest Expense for $375
Which of the following type of contingency would NOT be included in the financial statements including notes,
until it has been resolved?
A lawsuit we have filed against a competitor and it is probable that we will win
On January 1, 2005, Duckett Company borrowed $200,000 cash from a bank by signing a ten year installment note
bearing 7% interest. The note requires equal total payments each year on December 31. The journal entry to record
the second annual payment on December 31, 2006 will include a:
debit to Interest Expense for $12,987
On January 1, 2000, Vick Company issued $500,000 of 8%, 15 year bonds, at a price of 94. The bonds pay
semiannual interest on June 30 and December 31 of each year. Vick records the interest payments every six months
by amortizing the discount on bonds payable using the straight-line method. On Januray 1, 2005 Vick Company retires all of these bonds by buying them on the open market at a price of 97. The journal entry recorded by Vick Company on January 1, 2005 will include a:
Loss on Bond Retirement of $5,000
On January 1, Wildcats Company purchased 50,000 shares of common stock for $100,000 cash, and placed the
shares in the treasury. What impact will this transaction have on the accounting equation?
decrease assets, no effect on liabilities, decrease stockholders’ equity
Prior-period adjustments are:
added to or deducted from the beginning balance of retained earnings
Which of the following statements is false for a cash flow stament under the indirect method?
The gain on the sale of the equipment would be added to net income in the operating activities section.