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29 Cards in this Set
- Front
- Back
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What does FICA stand for and what is it's purpose?
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Federal Insurance Contributions Act is a payroll tax imposed by the Federal Government to employees and employers. It helps fund social security and medicare.
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What is Income Tax?
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Annual charge levied on both earned and unearned income.
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What is Excise Tax?
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Tax on use or consumption of certain products like fuel.
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What is Progressive Tax?
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Tax that increases with consumption or over time.
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What is Occupational Tax?
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It is a tax or (license fee) for Lawyers, accountants, physicians, massage therapist, etc., because of the profession.
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What is Accrual Basis Accounting?
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Accumulating/Increasing
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What is Cash Basis Accounting?
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Recording of actual cash received and actual expenses paid.
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What is different about a C-Corp?
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It is taxed separately from it's owners.
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What is 2/10 net 30 ?
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It means that if a person pays by the 10th or on the 10th day from receiving a good or service he or she will receive a 2% discount. The bill is due in 30 days from issuance of good or service.
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Explain Dollar-value. LIFO
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LIFO is referring to product/freight. last in first out. The last piece of merchandise that is rec'd will be the 1st to be sent out or bought. LIFO can help reduce a company's tax, if prices are rising.
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Explain Dollar-value FIFO
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FIFO is First in first out. This keeps the merchandise as fresh as possible.
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What are the 3 costs associated with depletion base?
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Variable development cost, Restoration cost, and Acquisition costs of real property.
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Explain Goodwill
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Goodwill is reputation, intelligence, brand and customers
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Explain goodwill impaired
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Goodwill that has become or is considered to be of lower value than @ the time of purchase.
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What is the relationship between FASB and R & D?
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With FASB companies must expense all research and development costs when occurred.
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What is the formula of Straight Line Depreciation Method?
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Cost less Salvage / Estimated service life
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What is the formula of the Activity Method?
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Cost less salvage multiplied by hrs. this year divided by total estimated hrs.
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What is a characteristic of Bonds?
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Guaranteed interest and principal
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What are Convertible bonds and why do Corporations use them?
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Bonds that can be changed into other corporate securities during a specified time. 1. Corps. issue C.B.'s because they can raise equity capital with out giving up more ownership control than necessary. 2. To obtain debt financing @ cheaper rates.
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What are the characteristics of Accounting?
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Identify, measure, and communicate financial information about economic entities to interested parties.
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What is the Ad Valorem Tax?
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It is a tax based on the value of real estate or personal property. (sales tax, VAT, inheritance tax, surrendering citizenship, or tariffs).
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What are tariffs?
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Tax on imports/Exports
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Financial Statements include the following:
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Balance Sheet
Income Statement Statement of Cash Flows Statement of Owners' or Stockholders' Equity Note Disclosures |
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What is the purpose of information presented in notes to the financial statements?
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To provide disclosure required by GAAp.
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What does the Tax Relief Reconciliation Act of 2001 reinstate?
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It Reinstates the estate tax in 2011.
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Why do we have financial reports?
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1. To help users with capital allocation decisions about the company.
2. Investors and Creditors us the reports to make their capital allocation decisions. 3. To determine how and at what cost money is allocated among competing interests. |
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An effective process of capital allocation is critical to a healthy economy, which does what?
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1. Promotes Productivity
2. Encourages Innovation 3. Provides an efficient and liquid market for buying and selling securities. |
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What is a use tax?
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It is imposed to prevent the avoidance of the sales tax.
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Why is accrual accounting used?
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To provide a better indication of ability to generate cash flows than the cash basis
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