Accounting Test 2

Front 1

Cash Over and Short

Back 1

an income statement account recording the income effects of cash overages and cash shortages

Front 2

voucher system

Back 2

a set of procedures and approvals designed to control cash disbursements and the acceptance of obligations

Front 3

Petty Cash

Back 3

used for small payments, designates advance money to establish the fund, to withdraw from the fund, and to reimburse the fund

Front 4

Outstanding Checks

Back 4

written, deducted, and sent to payees but not yet received by the bank for payment at the bank statement date

Front 5

Deposits in Transit

Back 5

deposits made and recorded by the depositor but not yet recorded on the bank statement

Front 6

Accounts receivable

Back 6

amounts due from customers for credit sales

Front 7

Installment Accounts Receivable

Back 7

amounts owed by customers from credit sales for which payment is required in periodic amounts over an extended period of time

Front 8

Bad Debts

Back 8

Accounts of Customers that are deemed uncollectible

Front 9

Realizable value

Back 9

refers to the expected proceeds from converting an asset into cash

Front 10

Cost

Back 10

Includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use

Front 11

Salvage (Residual) Value

Back 11

an estimate of an asset's value at the end of its benefit period

Front 12

Useful Life

Back 12

the length of time an asset is productively used in a company's operations

Front 13

Straight Line Depreciation

Back 13

charges the same amount of expense to each period of the asset's useful life

Front 14

Units of Production Depreciation

Back 14

charges a varying amount to expense for each period of an asset's useful life depending on its usage

Front 15

Accelerated Depreciation Method

Back 15

yields larger depreciation expenses in the early years of an asset's life, and less in later years

Front 16

Declining Balance Method

Back 16

uses a depreciation rate that is a multiple of the straight line rate and applies it to the asset's beginning-of-period book value

Front 17

Revenue Expenditures

Back 17

additional costs of plant assets that do not materially increase the asset's life or productive capabilities

Front 18

Capital Expenditures

Back 18

additional costs of plant assets that provide benefits extending beyond the current period

Front 19

Ordinary Repairs

Back 19

expenditures to keep an asset in normal, good operating condition

Front 20

Extraordinary Repairs

Back 20

expenditures extending the asset's useful life beyond its original estimate

Front 21

Depletion

Back 21

the process of allocating the cost of a natural resource to the period when it is consumed

Front 22

Natural Resources

Back 22

assets that are physically consumed when used

Front 23

Intangible Assets

Back 23

nonphysical assets that confer on their owners long-term rights, privileges, or competitive advantages

Front 24

Amortization

Back 24

The process of an intangible asset's cost is systematically allocated to expense over its useful life

Front 25

Patent

Back 25

an exclusive right granted to its owner to manufacture and sell a patented item or to use a process for 20 years

Front 26

Copyright

Back 26

gives the owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years

Front 27

Lease

Back 27

A contract under which property is rented

Front 28

Leasehold

Back 28

refers to the rights the lessor grants to the lessee under the terms of the lease

Front 29

Goodwill

Back 29

the amount by which a company's value exceeds the value of its individual assets and liabilities

Front 30

Current Liabilities

Back 30

obligations due within one year or the company's operating cycle, whichever is longer

Front 31

Long Term Liabilities

Back 31

when a company's obligations are not expected to be paid within one year or the company's operating cycle

Front 32

Short Term Notes Payable

Back 32

a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer

Front 33

Gross Pay

Back 33

the total compensation an employee earns including wages, salaries, commissions, bonuses, etc. before deductions such as taxes

Front 34

Net Pay (Take Home Pay)

Back 34

gross pay less all deductions

Front 35

Payroll Deductions

Back 35

amounts withheld from an employee's gross pay, eithr required or voluntary

Front 36

Estimated Liability

Back 36

a known obligation that is of an uncertain amount but that can be reasonably estimated

Front 37

Warranty

Back 37

a seller's obligation to replace or correct a product that fails to perform as expected within a specified period

Front 38

Contingent Liability

Back 38

a potential obligation that depends on a future event arising from a past transaction or event

Front 39

Bond

Back 39

its issuers written promise to pay an amount identified as the par value of the bond with interest

Front 40

Par Value of a Bond

Back 40

paid at a specific future date known as the bond's maturity date

Front 41

Bond Indenture

Back 41

The legal document identifying the rights and obligations of both the bond holders and the issuers

Front 42

Bond Certificate

Back 42

Includes the specifics of a bond (issuers name, par value, contract interest rate, and maturity date

Front 43

Contract Rate

Back 43

The interest rate that is specified in the indenture

Front 44

Market Rate

Back 44

the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level

Front 45

Discount on Bonds Payable

Back 45

occurs when a company issues bonds with a contract rate less than the market rate, meaning that the issue price is lower than the par value

Front 46

Straight-Line Bond Amortization

Back 46

allocates an equal portion of the total bond interest expense to each interest period

Front 47

Premium on Bonds

Back 47

When the contract rate of bonds is higher than the market rate, the bonds sell at a price higher than par value

Front 48

Installment Note

Back 48

an obligation requiring a series of payments to the lender

Front 49

Mortgage

Back 49

a legal agreement that helps protect the lender if a borrower fails to make required payments on notes or bonds