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acct 201 > acct 201 final > Flashcards

acct 201 final Flashcards

1
Q

what are the 4 basic principles for the house of GAAP

A

Historical cost principle, Expense recognition Principle, Revenue Recognition Principle, Objectivity Principle.

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2
Q

What are the 4 basic assumptions for the house of GAAP

A

Time period assumption, Monetary unit assumption, Going Concern assumption, Business entity Assumption

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3
Q

Amounts are initially recorded in the accounting records at their cost or purchase price

A

Historical Cost principle

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4
Q

Expenses are reported in the same period as the revenue that those expenses are generated.

A

Expense Recognition Principle

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5
Q

Revenue is recorded in the accounting records in the period in which it is earned

A

Revenue Recognition Principle

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6
Q

Amounts recorded in the accounting records must be based on objective evidence often called source documents.

A

Objectivity Principle

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7
Q

A company can divide its economic activities into artificial time periods, the most common are monthly, quarterly, and yearly

A

Time period Assumption

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8
Q

Money is the common denominator of the economic activity and provides an appropriate basis of measurement for reporting financial data

A

Monetary unit assumption

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9
Q

The assumption that the company will have a long life and remain in business long enough to accomplish the purposes for which it was founded

A

Going Concern Assumption

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10
Q

A business keeps its activity separate from its owners and any other business unit

A

Business entity assumption

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11
Q

What is the expanded accounting equation

A

Assets = Liabilities + Owners equity - Drawing + Revenues - Expenses

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12
Q

What are the three “flavors” of accounting and what they are used for

A

Financial Acct. - external sources
Managerial Acct.- internal sources
Tax Acct.- IRS/Gov’t

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13
Q

What are the 4 functions of Acct. and what do they stand for (IMRC)

A

I- Identify/ what happened
M- Measure/ how much
R- Record/ where
C- Communicate/ which

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14
Q

What are the 3 R’s

A

Relevant Reliable CompaRable

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15
Q

What is the book of original entry called

A

Journal

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16
Q

A list of all accounts used by a business and the identifying numbers for each account is referred to

A

Chart of accounts

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17
Q

what are the 3 essential parts of a T- account

A

Type, title, DR/CR

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18
Q

What source documents support wage expense

A

Employee earnings record/time cards

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19
Q

what source docs support the amount of “Sales Revenue” reported by an online seller

A

purchase orders + sales ticket/receipt

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20
Q

What is on the chart of accounts

A

Acct. name and number

not balance

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21
Q

What is normal balance and which accounts are on each side

A

Side on which an increase happens
Asset(L) Drawing(L) Expense(L) DEBIT
Liability(R) Capital(R) Revenue(R) CREDIT

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22
Q

What does Triple A and Triple T stand for

A

Triple A = Account Amount Action
Triple T= Time Type Tale

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23
Q

what is the depreciation equation

A

cost- salvage value / Estimated Useful Life

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24
Q

What are capital Expenditures

A

They add/improve a current asset

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25
Q

What are revenue expenditures

A

they maintain a current asset

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26
Q

What is the percentage of sales method
and the journal entry to go with it

A

1 step process
Amount of credit sales x estimate of ADA
DR: bad debt exp
CR: A.D.A (C-A)

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27
Q

What is the percentage of Receivables method and the journal entry for it

A

amount at year end x estimated bad debt then consider any A.D.A

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28
Q

What are the 5 steps of the accounting cycle

A
  1. Business transaction 2. journal entry 3. General ledger4. Trial balance 5. Financial Statements
29
Q

What is the difference between a general ledger and subsidiary ledger

A

General ledger is a listing of all accounts used and their balances
subsidiary ledger is supplementary listing showing a separate account for each customer

30
Q

What is it called when a business sells things but it expects some customers won’t pay

A

Uncollectible Accounts/ Bad Debts

31
Q

What is the direct write off method

A

it only incurs bad debt expense once it happens it also doesn’t estimate any bad debt

32
Q

What is the allowance method

A

It records bad debt expense in current period and uses estimates of how much they think they won’t collect

33
Q

What are the 2 methods allowed by GAAP for estimating uncollectible amounts

A

Percentage of Sales and Percentage of Receivables

34
Q

What is the Abbreviation of COSO stand for

A

Committee of Sonsoring Organizations

35
Q

What is the Fraud Triangle

A

Opportunity, rationalization, and pressure

36
Q

viruses ATTACHED to E-mails and websites monitor keystrokes: when you sign on to financial websites, it steals your passwords

A

Pharming

37
Q

hackers SEND emails to you posing as banks: you are asked for information using fake websites where they steal your passwords and personal data

A

Phishing

38
Q

Cybercrooks SET up wireless networks hoping you will use them to connect to the web: passwords and data are stolen if you connect

A

Wi-phishing

39
Q

Hackers send out spam and viruses from your PC

A

Bot-Networking

40
Q

Hackers set up websites with addresses similar to legit businesses: when you make a typo and hit their sites they infect your PC

A

Typo-Squatting

41
Q

What is the journal entry made by a merchant that sells goods and accepts a check as payment from the customer

A

DR: cash
CR: Sales
DR: COGS
CR: Merch Inv

42
Q

How is a bank reconciliation set up

A

LEFT Right
Per Bank Per Books

+ADD +ADD

-Deductions -deductions

=CCB =CCB

43
Q

What is a perpetual accounting system

A

A system that updates after every sale

44
Q

What is a periodic accounting system

A

A system that is updated at the end of the period

45
Q

What does a sales journal entry look like

A

DR: COGS
CR:Inv

46
Q

What does a purchase journal entry look like

A

DR: Inv
CR: A/P or cash if not on ACCT.

47
Q

what does FIFO mean

A

FIrst in First out

48
Q

what is LIFO

A

Last in First out

49
Q

In a period of rising prices, the inventory method which tends to give the highest reported ENDING inventory is

A

FIFO

50
Q

In a period of rising prices, the inventory method which tends t ogive the highest reported COST OF GOODS SOLD is

A

LIFO

51
Q

In a period of FALLING prices, the inventory method which tends t ogive the highest reported net income is

A

LIFO

52
Q

FOB destination=

A

The SELLER pays for transport

53
Q

FOB Shipping point=

A

The BUYER pays for transport

54
Q

Which part issues a debit memo

A

The Buyer

55
Q

how are trade discounts reported in the buyer’s accounting records

A

Not Reported TD’s are invisible to the accounting records

56
Q

Beginning Inv + Purchases=

A

Goods available for sale

57
Q

Sales-COGS=

A

Gross Profit

58
Q

What is the expanded income statement

A

Sales
-Sales discount
-Sales returns
-Sales allowance

= Net Sales

-COGS
=Gross profit

-Operating Expenses
Selling Expenses
General Expenses
Administrative Expenses

= Income form Operations

+ other Rev & Gains
- Other Exp & Losses

=Net income

59
Q

how are purchase discounts set up Ex. 2/10,n/30

A

2= Discount %
10= number of days before discount expires
n= If not paid NET due in 30 days
30= credit period/ when payment is due

60
Q

what is the expanded accounting cycle

A

1= business transaction
2= Journal entry
3= post to general ledger
4= unadjusted TB
5= Adjusting Process
6= post-adjusting TB
7= Financial Statement
8= closing process
9= post closing TB

61
Q

what are the 3 permanent accounts that are not closed

A

asset liability and capital

62
Q

what are the temporary accounts that are closed

A

revenue expenses drawing

63
Q

what is the 4 step closing process

A

close revenue accounts Income Summary
close expense accounts to IS
Close Income Summary to owners capital
Close Withdrawals Account to owners capital

64
Q

what does a closing process journal entry look like

A

DR: Fee earned
CR: I/S

DR:I/S
CR: Expense account

DR:I/S
CR:Owner cap.

DR: Owner cap.
CR:Drawing

65
Q

what is the cash basis of acct.

A

Register expenses when PAID register revenue when RECEIVED
when cash goes OUT and when cash comes IN

66
Q

what is the accrual basis of acct.

A

Rgister expenses when INCURRED and revenues when EARNED
when thing is used/consumed or when job is done

67
Q

what is the 3 step process for adjusting entries

A

“is” “Should be” “Adjust”

68
Q

what is the international counterpart to GAAP

A

IASB or IFRS

acct 201 (1 decks)

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