Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
68 Cards in this Set
- Front
- Back
|
What are included in cash?
|
Coins and currency, checking accounts, savings account, negotiable checks and bank drafts
|
|
|
What are excluded from cash?
|
Certificates of deposit (s-t investments), Bank overdrafts (current liability), postdated checks (receivable), Travel advances (prepaid expense), and postage stamps (prepaid expense)
|
|
|
What are amounts owed to the company by customers and other parties arising from the company's operations?
|
Receivables
|
|
|
What arise from the sale of the company's products or services to customers?
|
Trade Receivables
|
|
|
What are nonwritten promises to pay?
|
Accounts Receivable
|
|
|
What are unconditional written promises to pay?
|
Notes Receivable
|
|
|
What arise from transactions not directly related to the sale of products or services to customers. Examples include deposits with utilities, advances to subsidiaries, loans made by nonfinancial companies, deposits made to guarantee performance, and declared dividends and accrued interest on investment?
|
Nontrade Receivables
|
|
|
What is a noncash resource is exchanged for cash or a near cash resource?
|
Realized
|
|
|
What is the earning process is complete or virtually complete?
|
Earned
|
|
|
What is the revenue recognition exception?
|
uncertainty surrounding cash collection or because there is a material "right of return"
|
|
|
What is a cash discount method record total invoice price at time of sale (i.e., assume discount will not be taken). If the customer takes advantage of the discount, the discount is debited to the "Sales Discounts Taken" account?
|
Gross Method
|
|
|
What is a cash discount method where record net invoice price at time of sale (i.e., assume discount will be taken). If the customer does not take advantage of the discount, the discount is credited to the "Sales Discounts Not Taken" account?
|
Net Method
|
|
|
What is account is contra revenue?
|
Sales Discount Taken Account
|
|
|
What is treated as interest revenue and is recorded as other item on the income statement?
|
Sales Discount Not Taken
|
|
|
What are goods that are sold that are found to be defective, so the customer may retain the goods and be allowed a reduction in the purchase price called?
|
Sales Allowance
|
|
|
What is when customer returns goods to the seller, the exchange is called?
|
Sales Return
|
|
|
What represents a loss contingency that is probable and reasonably estimated, thus estimated they need to be expensed?
|
Bad Debt
|
|
|
When a company determines that a specific account is uncollectible, the account is what?
|
Written Off
|
|
|
What has no effect on the net realizable value of accounts receivable reported on the balance sheet?
|
Write-Off
|
|
|
What is retain risks and benefits of ownership (used as collateral for loans)?
|
Pledging
|
|
|
What is transfer some risks and benefits of ownership (specific receivables assigned with recourse)?
|
Assigning
|
|
|
What is transfer all risks and benefits of ownership (e.g., sale without recourse)?
|
Factoring (Sale)
|
|
|
What is an unconditional written agreement to collect a certain sum of money on a specific date?
|
Note Receivable
|
|
|
What means that they are legally and readily transferable among parities and may be used to satisfy debts by the holders of these instruments?
|
Negotiable Instruments
|
|
|
What is requiring the separation of the receivable into its principal and interest components?
|
Interest
|
|
|
What is the amount borrowed (principle) is listed as the face value, and the interest charged is stated as a specific rate applied to this face value?
|
Interest Bearing
|
|
|
What is the maturity value (the amount to be collected, including implicit interest and principal) is listed as the face value?
|
Non-Interest Bearing
|
|
|
What is when a company discounts a customer's note receivable at the bank, it transfers the note to the bank?
|
Discounting of notes receivable
|
|
|
What system involves a cash fund under the control of an employee tha enables a company to pay small accounts that might be impractical or impossible to pay be check?
|
Petty cash
|
|
|
What is the schedule that a company prepares to analyze the difference between the ending cash balance in its accounting records and the ending cash balance reported by its bank in a bank statement?
|
Bank reconciliation
|
|
|
What are classified as current assets and consist of goods held for sale in the ordinary course of business, goods in the process of production for sale, and goods held for use in the production of goods or services to be made available for sale?
|
Inventories
|
|
|
What system states the quantity of inventory on hand is determined only periodically through a physical count. COGS is a residual amount that is dependent upon the physical count of the ending inventory?
|
Periodic Inventory Systems
|
|
|
What system is a continuous record of inventory and COGS is maintained in the inventory account. That is, all purchases and sales of goods are recorded as they occur?
|
Perpetual Inventory Systems
|
|
|
What is the equation of net purchases?
|
Purchases + Freight-in - Purchases Returns and Allowances - Purchases Discounts Taken
|
|
|
What should be included on the balance sheet as inventory?
|
The basic criterion is economic control rather than physical possession or legal ownership.
|
|
|
What is buyer's at time of delivery to common carrier?
|
FOB shipping point
|
|
|
What is buyer's, if goods are properly segregated from seller's inventory?
|
Bill-and-hold sale
|
|
|
What is seller's, not buyer's (antique shop)?
|
Consignment goods
|
|
|
What is seller's, not buyer's, also the same as "product-financing arrangements"?
|
Sales with buybacks
|
|
|
What is buyer's, if you can estimate returns?
|
Sales with high rates of return
|
|
|
What is buyer's, if you can estimate collectability (payments made over time)?
|
Sales on installments
|
|
|
What is included in inventory of buyer?
|
FOB Shipping Point
|
|
|
What is included in inventory of seller?
|
FOB Destination
|
|
|
What should the cost of purchased inventory include?
|
the purchase price (net of purchase discounts) plus payments directly associated with inventory
|
|
|
What is incurred from the financing of inventory purchases generally is not included in the cost of the inventory?
|
Interest
|
|
|
What should the cost of manufactured inventory include?
|
direct and indirect costs incurred in the production activity
|
|
|
How are the related inventory costs transferred as inventory enters the production process?
|
To a work in process account and then transferred to a finished goods account
|
|
|
What is a company records the purchase at the gross price, and records the amount of the discount in the accounting system in the purchases discounts taken account (which reduces the inventory account on the B/S) only if the discount is taken?
|
Gross Price Method
|
|
|
What is when a company records the purchase at its net price, and records the amount of the discount in the accounting system in the purchases discounts lost account (which is classified as an Other Expense on the I/S) only if the discount is not taken?
|
Net Price Method
|
|
|
What cost-flow assumption follow actual physical flows?
|
FIFO
|
|
|
What cost-flow assumption method has ending inventory and COGS perpetual and periodic are identical?
|
FIFO
|
|
|
What follows the LIFO cost flow assumptions but overcomes many of the problems associated with simple LIFO?
|
Dollar-Value LIFO
|
|
|
What rule requires book-tax conformity?
|
LIFO-conformity rule
|
|
|
A change to what is treated as a change in accounting estimate (i.e. no retrospective adjustment)?
|
LIFO
|
|
|
What do you get maximum income when prices rising smallest COGS?
|
FIFO
|
|
|
What do you get maximum income when prices falling largest COGS?
|
LIFO
|
|
|
What is inventory valued at?
|
Lower cost or market
|
|
|
What is historical cost, computed via specific identification such as LIFO, FIFO, weighted average, etc.?
|
Cost
|
|
|
What is current replacement cost; market price at which goods can be purchased or reproduced?
|
Market Value
|
|
|
What constraints are placed on the market value?
|
Ceiling and Floor Constraints
|
|
|
What is that the market value should not be more than the net realizable value (i.e., estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal)?
|
Upper Constraint
|
|
|
What is that the market value should not be less than the net realizable value, reduced by an allowance for a normal profit margin (i.e., normal markup)?
|
Lower Constraint
|
|
|
What prevents overstatement of obsolete or damaged inventory and understatement of losses?
|
Upper Constraint or "ceiling"
|
|
|
What prevents understatement of inventory and overstatement of losses?
|
Lower Constraint or "floor"
|
|
|
What can the LCM rule be applied to?
|
Individual Inventory items, total of major inventory categories, and total inventory
|
|
|
What are exceptional cases that inventory can be stated above cost?
|
Precious metals, Agricultural, mineral and other products
|
|
|
What are two commonly used methods of estimating inventory costs?
|
Gross Profit method and Retail Inventory method
|
|
|
Why would inventory be estimated?
|
Interim reporting, Audit purposes, estimate destroyed inventory, incomplete records and budgeting
|
