Acct Final 1

Front 1

partnership

Back 1

an association of two or more
persons to carry on as
co-owners of a business for
a profit.

Front 2

Principal characteristics of a partnership

Back 2

1 Association of individuals
2 Mutual agency
3 Limited life
4 Unlimited liability
5 Co-ownership of property

Front 3

Mutual agency

Back 3

each partner acts on behalf of the partnership when engaging in partnership business
act of any partner is binding on all other partners

Front 4

dissolution

Back 4

whenever a partner withdraws or a new partner is admitted

Front 5

Initial investment

Back 5

recorded at the fair market value of the assets at the date of their transfer to the partnership

Front 6

ends involuntarily

Back 6

by death or incapacity of a partner

Front 7

may end voluntarily

Back 7

through acceptance of a new partner or withdrawal of a partner

Front 8

Partnership Assets

Back 8

assets invested in the partnership are owned jointly by all the partners

Front 9

Partnership Income or Loss

Back 9

co-owned; if the partnership contract does not specify to the contrary, net income or net loss is shared equally by the partners

Front 10

Initial investment

Back 10

recorded at the fair market value of the assets at the date of their transfer to the partnership
values assigned must be agreed to by all of the partners

Front 11

Partnership net income or net loss

Back 11

shared equally unless the partnership contract indicates otherwise
is called the income ratio or the profit and loss ratio
partner’s share of net income or net loss is recognized/recorded in the accounts through closing entries

Front 12

Bonds

Back 12

A form of long-term, interest-bearing note payable issued by corporations, universities and governmental agencies

Front 13

Secured bonds

Back 13

have specific assets pledged as collateral, unsecured do not

Front 14

Convertible bonds

Back 14

may be converted into common stock at the bondholder’s option

Front 15

Callable bonds

Back 15

are subject to retirement at a stated dollar amount prior to maturity

Front 16

Face value

Back 16

stated rate = market rate

Front 17

Below face value (discount

Back 17

when stated rate < market rate must discount price to get investors to buy

Front 18

Above face value (premium

Back 18

when stated rate > market rate all investors want to own so the price is bid up

Front 19

Characteristics of a Corporation

Back 19

Separate legal existence
Limited liability of stockholders
Transferable ownership rights
Ability to acquire capital
Continuous life
Corporation management
Government regulations
Additional taxes

Front 20

Stockholder Rights

Back 20

Once chartered, the corporation sells stock .
If only one class of stock - called common stock.
Ownership rights specified in the articles of incorporation or by-laws.
Proof of stock ownership is a printed or engraved form known as a stock certificate.

Front 21

Authorized Stock

Back 21

Maximum amount of stock a corporation is allowed to sell as authorized by corporate charter

Front 22

Issued Stock

Back 22

Number of shares of issued stock have been sold and been paid for

Front 23

Outstanding Stock

Back 23

Number of shares of issued stock
that are being held by stockholders

Front 24

Preferred Stock

Back 24

Capital stock that has contractual preferences over common stock in certain areas.
Dividends
Assets in the event of liquidation

Front 25

A corporation must have 3 things to pay cash dividends:

Back 25

Retained earnings
Adequate cash
Declared dividends

Front 26

The Primary Purpose of the Statement of Cash Flows Is

Back 26

cash receipts,
cash payments, and
the net change in cash resulting from:

Front 27

Direct Materials

Back 27

Raw materials - basic materials used in manufacturing

Front 28

Indirect Materials

Back 28

Raw materials that cannot be easily associated with the finished product are called indirect materials.

Front 29

direct labor

Back 29

Work of factory employees that can be physically and directly associated with converting raw materials into finished goods

Front 30

Indirect Labor

Back 30

Work of factory workers that have no physical association with the finished product or for which it is impractical to trace to the goods produced

Front 31

Manufacturing Costs – Manufacturing Overhead

Back 31

Costs that are indirectly associated with manufacturing the product

Examples include
ndirect materials
Indirect labor
Depreciation on factory buildings
Insurance, taxes, maintenance on factory facilities

Front 32

Product Costs

Back 32

Consist of the direct material cost, the direct labor cost, and the manufacturing overhead cost

Front 33

Identify the three broad functions of management

Back 33

Planning
Directing
Controlling

Front 34

Define the three classes of manufacturing costs

Back 34

Direct Materials
Direct Labor
Manufacturing Overhead

Front 35

Product costs are

Back 35

an integral part of producing the product
also called inventoriable costs
do not become expenses until the product is sold.

Front 36

Period costs are

Back 36

identified with a specific time period rather than a product
selling and administrative expenses

Front 37

USES OF PROCESS COST SYSTEMS

Back 37

Costs in a job order cost system are assigned to a specific job.
Examples include
Building a customized home
Making a motion picture
Making specialized machine

Front 38

COST BEHAVIOR ANALYSIS

Back 38

The study of how specific costs respond to changes in the level of business activity