Accounting 2010 Final Exam

Assets=L+SE

Accounting Equation

Contra-Asset account representing total depreciation recorded to date

Accumulated Depr.

Under this GAAP based method, revenues recognized when earned, expenses when consumed

Accrual Accounting

Entry used to ensure that revenues and expenses are recognized for internal transactions

Adjusting Entry

Contra Asset account representing the amount of accounts receivable that we do not expect to collect

Allowance for Uncollectible

Cash payments of equal amounts over equal time intervals

Annuity

Total number of shares available to sell

Authorized Stock

Expected cost of customers failures to pay on accounts receivable

Bad Debt Expense

A financial statement that presents the financial position of the company on a particular date

Balance Sheet

Matching the balance of cash in the bank account with the cash balance

Bank Reconciliation

Formal debt instrument that obligate the borrower to repay a stated amount at a specified maturity date

Bonds

Cost of a fixed asset less its accumulated depreciation

Book Value

The unamoritized balance in the bonds payable account; the amount owed to bond holders at a point in time

Carrying Value

The rate quoted in the bond contract used to calculate the cash payment for intrest

Stated interest rate

Means "right"; Right side of the T-account; decreases assets, increases liabilities and equity

Credit

cash or non-cash item expected to be consumed or become cash within one year

Current assets

Company is expected to use cash to satisfy within one year

Current liabilities

Current Assets divided by current liabilities

Current ratio

Means "left"; Left side of the T account; increases assets, decreases liabilities and equity

Debit

Allocating the cost of a tangible asset over its service life

Depreciation

A bond's issue price is below the face amount. This happens when the market rate exceeds the stated rate.

Discount

Payments to stockholders; no liability until declared

Dividends

Costs of providing products and services

Expense

The amount the company promises to pay when the bond matures

Face value

Measurement of business activities and communication of those measurements to external parties for decision-making

Financial Accounting

Transactions involving external sources of funding (debt & equity, but not interest)

Financing Activities

How much an amount today will grow to be in the future

Future Value

The rules of financial accounting

GAAP

For example, LIFO, FIFO, or average cost

Inventory Methods

Transactions involving the purchase and sale of long-term assets

Investing Activities

The number of shares sold to investors; includes treasury shares

Issued Stock

A chronological record of all transactions affecting a firm

Journal

All accounts used to record the company's transaction; journal entries are posted here

General Ledger

Amount owed to creditors

Liability

Represents the true interest rate used by investors to value a bond; also used to calculate interest expense

Market Interest Rate

In its simplest form; revenues less expenses

Net Income

The cash the company expects to collect on accounts receivable; accounts receivable less allowance for uncollectibles

Net Realizable Value

Revenue less contra-revenues (sales discounts, sales returns, and sales allowances)

Net Sales Revenue

Transactions involving the primary operations of the company

Operating Activities

Number of shares held by investors; exclues treasury stock; = issued minus treasury

Outstanding Shares

Stock that has a mixture of attributes somewhere between common stock and bonds payable

Preferred Stock

A bond's issue price is above the face amount. This happens when the stated rate exceeds the market rate.

Premium

For example, rent or insurance paid in advance and used in a later period

Prepaid Expenses

The value today of receiving some amount in the future

Present Value

Cumulative amount of net income earned over the life of the company that has not been distributed s dividends

Retained Earnings

Record revenue in the period in which it is earned

Revenue Principle

Reduction in the amount to be paid by a customer if payment is made within a specified period of time; e.g., 2/10 n/30

Sales Discounts

Seller reduces the customer's balance owed or provides a partial refund because of some deficiency in the product

Sales Returns & Allowances

A financial statement that measures activities involving cash receipts and cash payments over an interval of time

Statement of Cash Flows

Capital stock + Additional paid-in-capital + Retained Earnings - Treasury Stock

Stockholders' Equity

A corporation's own stock that it has reacquired

Treasury stock

A liability that exists when a company receives cash in advance from a customer

Unearned Revenue

Current assets minus current liabiities

Working capital