intermediate 2 exam grind TWO

Unamortized premium of bonds payable

A long-term liability indicating the amount of bond premium that has not yet been expensed.

Bank loans payable

Current liability due to be paid from sales revenue, particularly in the context of winery products requiring aging.

Serial bonds

Bonds where a portion is due each year, classified as both current and long-term liabilities.

Amounts withheld from employers wages for income taxes

Current liability reflecting the tax that has been withheld from employee wages.

Notes payable due

A current liability if associated with operations where current assets are being utilized.

Credit balances in customers’ accounts

Current liability resulting from returns and allowances after accounts have been collected in full.

Overdraft of a bank account

Current liability indicating a negative balance in the account.

Deposits made by customers

Current liability for funds received from customers who placed orders.

Discount on Bonds Payable

A contra liability account, typically recorded on the balance sheet to offset the bonds payable.

Interest expense [credit balance]

An accounting entry reflecting accrued interest that is owed, recorded on the balance sheet.

Unamortized bond issue costs

Costs associated with bond issuance that have yet to be amortized, indicated on the balance sheet.

Gain on repurchase of debt

Recognized on the income statement as revenue from paying off debt for less than its carrying amount.

Mortgage payable

Long-term liability payable in equal amounts over a specified term, recorded on the balance sheet.

Effective interest method of bond amortization

A method where interest expense equals the market rate multiplied by the carrying amount of bonds.

Difference between reacquisition price and net carrying amount

The basis for calculating the gain or loss on the early extinguishment of debt.

Revenue recognition standard

Revenue should be recognized when each performance obligation is satisfied in the context of sales.

Percentage of Completion Method

An accounting method allowing companies to recognize revenue and gross profit during the contract period.

Consignment sale

A sale where the consignee records a payable upon the sale of consigned merchandise.

Construction in process reporting

Balances reported net as a current asset if a debit balance, and as a current liability if a credit balance.

Bonds sold at a premium

Indicates that the nominal rate of interest exceeded the market rate, affecting interest expense.

Bond interest payment calculation

Equal to the face amount of bonds multiplied by the stated interest rate.

Accrued interest calculation

Increased cash received when bonds are issued between interest payment dates.