Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Accounting 210 > AC210 Test 4 > Flashcards

AC210 Test 4 Flashcards

1
Q

Liabilities:

A

Debt you owe to someone else.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Accrued Liabilities:

A

expenses you haven’t paid yet.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Payroll deductions =

A

gross - net

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are things you’ll pay no matter what?

A

FICA and Federal Income Tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What would an employees J/E look like?

A 
dr wage expense
cr withheld income taxes payable
cr FICA payable
cr united way payable
cr cash
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What would an employers J/E look like?

A

dr payroll tax expense
cr FICA payable
cr federal unemployment tax payable
cr state unemployment tax payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

FICA is a ____, which means what?

A

matching contribution. this means your company matches what you pay to FICA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Corporations have to pay ___% for employees.

A

35

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

If someone has a taxable income of 1M. what is the corresponding J/E?

A

dr income tax expense 350k

cr income tax payable 350k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Make a J/E for this transaction.

Sell a $1000.00 TV with 5% sales tax.

A

dr cash 1,050
cr sales revenue 1,000
cr sales tax payable 50

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

bonds:

A

Ways a company can capitalize. There’s a bond market.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

J/E for bond at face value:

A

dr cash

cr bonds payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

J/E for bond at premium:

A

dr cash
cr bonds payable
cr premium on bonds payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

J/E for bond at discount:

A

dr cash
cr discount on bonds payable
cr bonds payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

J/E for interest on bond at face value:

A

dr interest expense

cr interest payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

J/E for retiring a bond at face value:

A

dr bonds payable

cr cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a contingent liability?

A

a liability that you may or may not have.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the questions to ask when you have a contingent liability?

A

How likely?

Can amount be estimated?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the answers to the questions about a contingent liability?

A 
How likely? 
- probable
- possible
- remote
Can the amount be estimated?
- if probable, yes
- if possible, no
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

If a contingent liability is probable and the amt. can be estimated, what should you do?

A

record the liability and estimate loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

How to you record a possible contingent liability with a J/E?

A

dr product litigation expense

cr product litigation liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

If a contingent is possible, what should you do?

A

describe in financial statement notes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

If a contingent liability is probable, but the amt. can’t be estimated, what should you do?

A

Describe in financial statement notes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

If a contingent liability is remote, what should you do?

A

don’t mention it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Quick Ratio:

A

(cash + short-term investments + netAT) / current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What does the quick ratio tell you?

A

How easy is it to pay liabilities with current assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Times Interest Earned Ratio:

A

(Net Income + Interest Expense + Income Tax Expense) / Interest Expense

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What does the times interest earned ratio tell you?

A

How able am I to cover the cost of my debt.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Benefits of Common Stock:

A
  1. Voting rights.
  2. Dividends
  3. Residual Claims- you have some claim on what’s left over if they go out of business.
  4. Preemptive rights: you have first dibs on new stocks.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How much power to stockholders have? Explain.

A

A lot. Stockholders pick Board of Directors. Board of Directors choose officers. Officers choose vice presidents.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Advantages of equity:

A

does not have to be repaid.

dividends are optional

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

advantages of debt (bonds):

A

interest on debt is ta deductible

debt does not change stockholder’s control.

33
Q

authorized shares:

A

maximum number of shares that can be issued

34
Q

unissued shares:

A

have never been issued

35
Q

treasury stock:

A

stock that the company decided to buy back.

36
Q

outstanding shares:

A

stocks that have been issued.

37
Q

IPO / Initial Public Offering

A

the first time someone sells stock.

38
Q

What is the dividends date timeline look like and what are the corresponding J/E?

A

a. declaration date:
dr dividends declared
cr dividends payable

b. date of record
no J/E

c. date of payment
dr dividends payable
cr cash

39
Q

What kind of account is treasury stock?

A

A contra-equity account.

40
Q
  • Reacquire 50,000 shares of its common stock at $25/ share.

- Reissue 5,000 shares at $28/ share

A 
dr treasury stock (+xSE, -SE) 125,000
cr cash (-A) 125,000

dr cash (+A) ($28x 5,000) 140k
cr treasury stock (-xSE, +SE) (5,000x 25) 125k
cr APIC 15k

41
Q

J/E if issued 20% stock dividend on 38M outstanding shares.

A

dr retained earnings 7,600,000

cr common stock

42
Q

What are stock splits?

A

Have 7 shares of stock. We are going to split those in half to make 14 shares of stocks.
retained earnings doesn’t change and there is no j/e for split. par value gets cut in half..

43
Q

Characteristics of preferred stock:

A

Usually has a fixed dividend rate
Priority over common stock
no voting rights

44
Q

Current Dividend preference:

A

Current preferred dividends will get dividends before common stock does

45
Q

Cumulative dividend preference

A

any unpaid dividends from previous years must be paid before common stock builds up.

46
Q

EPS formula and meaning.

A

net income / average number of common shares outstanding.

  • earnings per share
  • high as possible
47
Q

ROE formula and meaning

A

net income / average stockholder equity

  • return on equity
  • amount earned for each dollar invested
  • high as possible.
48
Q

Price/ Earnings Formula

A

current stock price (per share) / earnings per share (annual)

  • measure of value that investors place on a company common stock.
49
Q

Issued 1,000 shares with par value $1.00

$50.00 / share

A

dr cash 50k
cr common stock 1k
cr APIC 40k

50
Q

What is the statement of cash flow?

A

How did we use cash and how did we bring it in?

51
Q

Operations:

A

Collect cash from customers, pay cash to suppliers, employees, etc. Day to day activities.

52
Q

Investing:

A

Cash paid and received from selling and buying long term assets.

53
Q

Financing:

A

cash received and paid for exchanges with lenders and stockholders.

54
Q

Order of statement of cash flows

A

OIF

55
Q

What are the inflows for cash flow of operations?

A
  • collecting cash from customers
  • receiving dividends
  • receiving interest
56
Q

What are the outflows for cash flow of operations?

A
  • pay for services
  • pay for wages
  • pay income tax
  • pay interest.
57
Q

What are the inflows for cash flow of investing?

A
  • sale or disposal of property, plant or equipment

- sale or maturity of investments in securities.

58
Q

What are the outflows for cash flow of investing?

A
  • purchase of property, plant, or equipment

- purchase of investments in securities

59
Q

What are the inflows for cash flow of financing?

A
  • borrow money from lenders through formal debt contracts.

- issuing stocks to owners

60
Q

What are the outflows for cash flow of financing?

A
  • repaying principal to lenders
  • repurchasing stocks from owners.
  • paying cash dividends to owners.
61
Q

How does the indirect method work?

A

net income + non-cash expenses such as depreciation and amortization…… then address the changes in current assets and current liabilities.

62
Q

If current assets increase, what should you do on the cash flow of operations? Decreases?

A

subtract from net income.

add to net income.

63
Q

If current liabilities increase, what should you do on the cash flow of operations? Decreases?

A

add to net income.

subtract from net income.

64
Q

Ex.
You purchased equipment for 30M.
You purchased equipment for 11M.

What is the cash flow from investing activities?

A

(30M)
(11M)
= (41M) outflow of 41M

65
Q

Ex.
Borrowed $9M from bank.
Paid off a long-term debt of $5M.
Issued new stock worth $3M.

cash flow from financing activities?

A

9M
(5M)
3M
= 7M

66
Q

If you issue stock, which bucket would it be located in?

A

Financing

67
Q

Ex.

  • net income: $200.00
  • cash paid to suppliers: $30.00
  • cash received from customers: $35.00
  • cash paid to purchase building: $15.00
  • cash received from issuance of stock: $4.00
  • cash paid to repurchase our own stock $1.00
  • cash received from sale of equipment: $3.00

a. cash flow from investing.
b. cash flow from financing.

A

a. (15.00) + 3.00 = (12) outflow

b. 4.00 + (1) = 3 inflow

68
Q 
Ex.
Net Income: 1,000
A/R in 2009: 15.
A/R in 2010: 10
A/P in 2009: 10
A/P in 2010: 40

cash flow from operations.

A

1,000 + 0 + (5) + (30) = 965 inflow

69
Q

DO EXERCISES AT END OF POWERPOINTS AND IN BOOK. LOOK OVER THE MULTIPLE CHOICE QUESTIONS AND MAKE SURE YOU KNOW ALL OF THESES. YOU NEED TO DO REALLY GOOD ON THIS TEST OR ELSE.

A

OKAY? OKAY!

70
Q

If the market rate is 4% and the stated rate of a bond is 6%, then what is the bond at?

A

Premium

71
Q

If the market rate is 6% and the stated rate of a bond is 6%, then what is the bond at?

A

Face Value

72
Q

If the market rate is 8% and the stated rate of a bond is 6%, then what is the bond at?

A

Discount

73
Q

If the face value of a bond is $1,000 what will the premium be? The discount? Don’t get technical.

A

More than face value i.e. 1,050

Less than face value i.e. 950

74
Q

Timeline and corresponding journal entries for notes payable.

A
  1. at issuance:
    dr cash
    cr n/p
  2. accrued interest at year end
    dr interest expense
    cr interest payable
  3. at end
    dr n/p
    dr remaining interest payable
    cr cash
75
Q

J/E for a large stock dividend

A

dr R/E

cr common stock

76
Q

J/E for a small stock

A

dr R/E

cr common stock

77
Q

If you have a large stock dividend, what is the effect of net change in equity?

A

no net change in equity.

78
Q

You have $20,000 worth of dividends to pay.
100 shares of preferred stock
$1.00 par value
6% cumulative

250 shares of common stock
$1.00 par value

2 years of dividends in arrears

How much do preferred stockholders get this year?
And common stockholders?

A

100 x 1 x .06 = $6.00 x 2 prior years = $12 plus the current year: $6.00 = $18.00 total

$20,000 - $18.00 = $19,982

Accounting 210 (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions