ACC221 Exam 2

property, plant, and equipment

assets that last longer than one year that are used in the business

depreciation expense

an account that recognizes the useful life of a PP&E item is used up over time

allocate the cost over the accounting periods of useful life

accumulated depreciation

contra-asset (negative # in asset section)

increases with a credit

property, plant, & equipment, net

net book value

assets that are expected to last greater than one year

supplies adjusting

company buys a large amount of supplies to last whole year

wages payable adjusting

workers at a company work on the last few days of the month and dont get paid until the following accounting period

prepaid rent adjusting

companies will pay their rent in advance

unearned revenue

represents cas received for work that will be performed in the future

liability

external audit

an examination of a companies financial statements by and independent auditor

current assets

turned to cash in less that one year

long term assets

have a value or useful life of greater than one year

cash/cash equivalents

can be turned to cash in less than 3 months

short term investments

take 3-12 months to turn to cash/marketable securities

long term investments

take greater than 12 months to turn to cash

goodwill

the amount a company “overpays” when buying another co

intangible assets

assets that arent tangible but still represent value to the co

ex. patent, trademark

deferred income taxes/deferred tax assets

represent a future tax saving for the co

current liabilities

payable in less than 1 year

long term liabilities

payable in greater than 1 year

stored value card liability

unused gift cards

deferred tax liability

amount a co will owe in the future for txes

working capital

represents amount of cash left over if the co had to pay all its current liabilities today

authorized common stock

number of shares co is allowed to sell

issued common stock

the number of shares that have been sold

treasury stock

known as “shares repurchased”

represent the value of common stock that has been repurchased by the co