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ACC 1100 > ACC 1100 > Flashcards

ACC 1100 Flashcards

1
Q

forms of business organizations

A

sole proprietorship, partnership, corporation

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2
Q

sole proprietorship

A

-one person owns and operates the business
-owner is fully liable for all debts of the business

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3
Q

partnership

A

-a business owned jointly by two or more owners (the partners)
-partnership contract determines how the partnership is governed and how profits are shared
-all partners are fully liable for debts of the partnership
-biz does not pay tax, owner has to pay tax on their earnings

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4
Q

corporations

A

-a business incorporated and is a legal entity separate from owners
-the owners of the corporation are shareholders

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5
Q

types of corporations

A

public and private

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6
Q

public corporations

A

shares are sold to the general public through the intermediary of a stock exchange

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7
Q

private corporations

A

shares of private corporations are not available to the general public (usually family business)

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8
Q

what is accounting

A

an information system that measures and records business activities, process data into reports and disclose results to decision makers

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9
Q

what are reports called in accounting

A

financial statements

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10
Q

what are decision makers called in accounting

A

information users

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11
Q

financial statements

A

the business documents that companies use to report the results of their activities to various user groups

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12
Q

types of financial statement

A

-income statement
-statement of changes in equity
-balance sheet
-statement of cash flows

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13
Q

who uses accounting data

A

internal users (HR, managers, finance, marketing)
external users (tax authority, investors, creditors, customers, non profit)

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14
Q

GAAP

A

generally accepted accounting principals

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15
Q

IFRS

A

international financial reporting standards
-set up to make comparisons btwn countries

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16
Q

what type of accounting do public corporations use

A

IFRS

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17
Q

what type of accounting do private corporations use

A

IFRS or Accounting Standards for Private Enterprises (ASPE)

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18
Q

what type of accounting do nonprofit orgs use

A

CPA canada handbook

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19
Q

what type of accounting do pension plans use

A

CPA canada handbook

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20
Q

different accounting for different orgs (what are the different types of orgs)

A

private corps, public corps, not for profit orgs, pension plans

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21
Q

the accounting equation

A

assets = liabilities + shareholders equity

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22
Q

types of assets

A

cash, land, inventory, A/R, equipment

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23
Q

types of liabilities

A

A/P, bank loan

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23
Q

types of shareholder’s equity

A

share capital, retained earnings

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24
Q

share capital

A

owner’s initial investment into the business (cash and other assets)

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25
Q

retained earnings

A

accumulated net income (revenue-expenses) of the company less dividends (profits distributed by owners) declared

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26
Q

conditions for something to be an asset

A
  1. controlled by the entity
  2. resulting from past events
  3. expected future economic benefits
  4. can be measured/estimated
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27
Q

conditions for something to be a liability

A
  1. present obligation of the entity
  2. resulting from past events
  3. expected outflow of resources in settlement
  4. can be measured/estimated
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28
Q

accounting transaction

A

occurs when an economic event results in a company’s financial position changing in a measurable way

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29
Q

examples of events that are accounting transactions

A

-changes financial statement elements
-change is measurable

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30
Q

transaction analysis

A

the process of determining the economic effects of a transaction on the elements of the basic accounting equation

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31
Q

double entry accounting

A

describes the system used by companies to record the effects of transactions on the accounting equation
-affects at least 2 accounts

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32
Q

debits on the

A

left

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33
Q

credits on the

A

right

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34
Q

debits increase

A

assets, expenses, dividends

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35
Q

debits decrease

A

liabilities, share capital, revenues

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36
Q

credits increase

A

liabilities, share capital, revenues

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37
Q

credits decrease

A

assets, expenses, dividends

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38
Q

what has a normal credit balance

A

liabilities, share capital, revenues

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39
Q

what has a normal debit balance

A

dividends, expenses, assets

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40
Q

retained earnings=

A

revenues-expenses-dividends

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41
Q

revenue

A

results from increases in economic resources (usually increase in asset, sometimes decrease in liability) that result from the sale of a product/service in the normal course of business

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42
Q

how does revenue decrease liability

A

company receives cash in advance before providing service (liability because you owe customers the service). deferred revenue

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43
Q

expenses

A

the cost of resources used to earn revenues during a period

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44
Q

types of expenses

A

-cost of services used to earn revenue
-used asset

45
Q

when is the revenue recognized in accrual basis of accounting

A

when it is earned (when a service is performed, goods delivered), regardless of whether cash has been received

46
Q

when is an expense recognized in accrual basis of accounting

A

when incurred to generate revenue (when a service is used, good consumed), regardless of whether cash has been paid

47
Q

when is revenue recognized in cash basis of accounting

A

when cash is received

48
Q

when is an expense recognized in cash basis of accounting

A

when cash is paid

49
Q

accrual accounting pros and cons

A

less verifiable, greater representational faithfulness, difficult to use, less year to year variation in income

50
Q

cash accounting pros and cons

A

high degree of verifiability, poor representation of faithfulness, easy to use, greater year-to year variation in income

51
Q

bond payable

A

a liability
-money that is borrowed from people instead of the bank

52
Q

note payable

A

-a liability
-a written document of owing others
-if you signed something it’s a note payable, if you didn’t it’s A/P

53
Q

interest expense

A

expense

54
Q

prepaid insurance

A

at the time of payment it is an asset bc it hasnt been used yet. Once it is used, asset decreases and insurance expense increases

55
Q

bad debt expense

A

record the uncollected portion of A/R
-ie if a client goes bankrupt but they still owe money

56
Q

general ledger account

A

T account that summarizes the balance of each account

57
Q

trial balance

A

list of general ledger accounts and their balances at a specific time

58
Q

what is the order of the trial balance

A

the order of the accounting eqn
assets, liabilities, share capital/common shares, revenue, expenses, dividends

59
Q

unadjusted trial balance

A

the trial balance before considering adjusted journal entries

60
Q

steps of the accounting cycle

A
  1. journal entries to record transactions and events
  2. post journal entries to ledger
  3. prepare unadjusted trial balance
  4. prepare and post entries
  5. prepare adjusted trial balance
  6. prepare statement of income
  7. prepare statement of retained earnings
  8. prepare closing entries
  9. prepare post-closing trial balance
  10. prepare statement of financial position and statement of cash flows
61
Q

t account

A

used to summarize the balance of each account

62
Q

trial balance

A

a list of general ledger accounts and their balances at a specific time

63
Q

what order are account titles listed in in trial balances

A

assets, liabilities, share capital, revenue, expenses, dividends

64
Q

unadjusted trial balance

A

the trial balance before considering adjusted journal entries

65
Q

straight line method of depreciation

A

(cost of asset - resale value)/useful life

66
Q

how long to use an asset for it to be long term and depreciate

A

1 year

67
Q

format for statement of income

A

revenues
-expenses
income before tax
-income tax expense
=net income

68
Q

statement of changes in equity

A

shows the changes in each component of shareholder’s equity and total equity during a period of time

69
Q

statement of retained earnings

A

-reports the changes in retained earnings during the period

retained earnings at beginning of period
+net income for period
-dividends
=retained earnings at end of period

70
Q

temporary accounts

A

closed at the end of each year
-revenue, expenses, dividends

71
Q

permanent accounts

A

not closed at the end of each year
-assets, liabilities, shareholders equity (common shares and RE)

72
Q

which account is used to close accounts

A

income summary

73
Q

statement of financial position

A

snapshot of the financial position of the entity at a particular point in time
-lists assets, liabilities and SE

74
Q

current assets

A

assets that will be sold, consumed, transformed into cash during the current year or operating cycle (whichever is longer)
-cash, A/R, inventory)

75
Q

noncurrent assets

A

assets that will not be sold, consumed or transformed into cash during the current year or operating cycle
-plant
-property
-equipment

76
Q

current liabilities

A

liabilities that will be settled during the current year or operating cycle (whichever is longer) by provision of service or use of assets
-A/P
-taxes payable

77
Q

non current liabilities

A

liabilities that will be settled some time after current year/operating cycle or will be settled by something other than a current asset
-long term debt, future income taxes

78
Q

accrued expenses

A

expenses that have been incurred but not yet recorded
-salary expense, interest expense, income tax expense

79
Q

accrued revenues

A

revenues that have been earned but not yet recorded
-interest revenue

80
Q

gross profit margin

A

gross profit/sales

81
Q

profit margin

A

net income/sales

82
Q

Return on assets (ROA)

A

net income/average total assets

83
Q

return on equity ROE

A

net income/ average common shareholders equity

84
Q

basic earnings per share

A

net income/average number of common shares

85
Q

asset turnover

A

sales/average total assets

86
Q

price earnings ratio

A

market price per share (at end of year)/ basic earnings per share

87
Q

dividend yeild

A

dividend per share/market price per share

88
Q

current ratio

A

current assets/current liabilities

89
Q

receivable turnover

A

sales/average AR

90
Q

inventory turnover

A

cogs/average inventory

91
Q

debt to total assets

A

total liabilities/total assets

92
Q

times interest earned

A

net income+interest expense+income tax expense / interest expense

93
Q

types of investors in investment decesion

A

investors, creditors

94
Q

what is the instrument of an investor

A

equity

95
Q

what is the payoff for an investor

A

dividends, change in share prices

96
Q

what is the instrument of creditors

A

debt

97
Q

what is the payoff of creditors

A

interest revenue

98
Q

how to measure return for investors

A

dividends+change in share price / beginning share price

99
Q

how to measure return for creditors

A

interest revenue/amount of loan

100
Q

cash

A

must be available for use without restriction on how and when to spend

101
Q

cash equivalent assets

A
  1. very secure
  2. liquid
  3. investments that have a short maturity
102
Q

examples of timing differences

A

deposits in transit, outstanding cheques, EFT collection or payment

103
Q

deposits in transit

A

deposits recorded/made by company but not yet recorded by bank (night chute deposit)

104
Q

outstanding cheques

A

cheques written and mailed out by company but not yet deducted from their bank account (company b hasnt cashed it yet so it’s not taken out of company a account)

105
Q

EFT collection or payment

A

made by bank but not noticed by company (money deposited in company account but they don’t know)

106
Q

trade receivables

A

claims arising from the sale of goods to customers (A/R)

107
Q

other receviables

A

claims that arise from transactions other than sale of goods (taxes receviable, dividends receviable, loans receviable)

108
Q

FOB destination

A

ownership changes at destination, seller responsible for paying shipping costs and delivering merchandise to destination

109
Q

FOB shipping point

A

ownership changes at shipping point, buyer responsible for paying shipping costs and delivering merchandise

110
Q

sales allowance

A

sellers offer and allowance by reducing selling price for later delivery or goods with minor defects

111
Q

how to calculate AFECL

A

= required balance of AFECL - unadjusted AFECL balance

ACC 1100 (1 decks)

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