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accounting test 1 > acounting test 1 > Flashcards

acounting test 1 Flashcards

1
Q

person whom the corporation owes money

A

creditor

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2
Q

obligation to repay a creditor

A

liability

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3
Q

borrowing money with a promise to repay on a later date with interest

A

notes payable

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4
Q

used by corporations to obtain large amounts of money with promise to repay

A

bonds payable

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5
Q

dollar amount paid to corporation for shares

A

common stock

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6
Q

makes of 70% of all businesses in the U.S. Easiest the start up but has high liability

A

sole proprietorship

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7
Q

a business of 2+ people with low tax rates but high liquidity due the nature of the business form

A

partnership

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8
Q

large business not owned by a single entitiy but a group of stockholders who own portions of the business

A

corperation

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9
Q

what business is the highest taxed and is normally double taxed

A

corporations

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10
Q

portion of a companys earnings paid to the share holders

A

dividends

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11
Q

economic resources of a corporation, creditors and stockholders have claim to these

A

assets

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12
Q

residual interest in assets of a corporation that remain after deducting liability

A

stockholders equity

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13
Q

purchase and sale of the assets that used in operations

A

investing activities

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14
Q

increase in assets that results from the sale of products or services business

A

revenue

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15
Q

obligation to a supplier to repay the amount owed if a corporation uses credit

A

accounts payable

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16
Q

companies’ business activities are summarized and reported in a set of standardized reports. Investors use these to assess information and make decisions about a company

A

financial statement

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17
Q

What are the 4 basic financial statements

A

balance sheet, income statement , retained earnings report, statement of cash flow

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18
Q

reports the resources owned by a company and the claims against those resources (liability and stockholders equity) at a specific point in time

A

Balance sheet

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19
Q

reports how well a company has performed over a period of time

A

income statement

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20
Q

reports how much of the company’s income was retained in the business and how much was distributed to owners in a period of time

A

retained earnings report

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21
Q

reports the sources and uses of a company’s cash over a period of time

A

statement of cash flow`

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22
Q

a common set of rules and conventions that have been developed to guide the preparation of financial statements

A

GAAP

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23
Q

sets the accounting rules for publicly traded company’s

A

SEC

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24
Q

the balance sheet is organized to help users identify the fundamental economic similarities and differences between the various items within the balance sheet

A

classified balance sheet

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25
Q

accounting year that usually lines with the business cycle

A

fiscal year

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26
Q

basic classification of a company’s assets between current and noncurrent items

A

current assets

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27
Q

Cash and other assets are expected to be converted within

A

1 year or one operating cycle

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28
Q

average time it takes a company to purchase goods, resell goods, and collect cash from customers

A

operating cycle

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29
Q

common types of current assets

A

cash, marketable securities, accounts receivable, inventories

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30
Q

assets not classified as current are classified as long-term or _______. These include long-term investments such as property, plant , and equipment.

A

noncurrent assets

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31
Q

investment held for 1+ year

A

long-term investment

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32
Q

long-lived, productive assets used by a company to produce revenue

A

property, plant , and equipment

33
Q

provide benefit to a company for a number of years but they are not physical

A

intangible assets

34
Q

obligations that will be satisfied within 1 year or the operating cycle, listed in order in which they will be due

A

current liabilities

35
Q

obligation to repay a vendor

A

accounts repayble

36
Q

obligation to repay an employee

A

salaries payable

37
Q

obligation to deliver goods or perform a promised service

A

unearned revenue

38
Q

obligation to pay interest on money that a company has borrowed

A

interest payable

39
Q

obligation to repay taxes on company income

A

income taxes payable

40
Q

obligation to pay a required payment beyond 1 year or operating cycle

A

long term liability,

41
Q

stockholders equity arises from 2 sources

A

Contributed capital, retained earnings

42
Q

owners contributions of cash and assets to the company including stock

A

contributed capital

43
Q

accumulated net income of a company that has not been distributed to owners in the form of dividends

A

retained earnings

44
Q

a company’s liabilities and equity

A

capital

45
Q

ability to pay obligations as they become due

A

liquidity

46
Q

measure of liquidity

A

working capital

47
Q

current assets minus current liability

A

working capital

48
Q

alternative measure of liquidity that allows comparisons to be made between different companys

A

current ratio

49
Q

current asses divided by current liabilities

A

current ratio

50
Q

reports the results of company’s operations over a period of time

A

income statement

51
Q

increase in net assets that result from the sale of products or services

A

revenue

52
Q

increase in net assets that occur from peripheral or incidental transactions

A

gains

53
Q

cost of resources used to earn revenue

A

expenses

54
Q

decreases in net assets that occur from peripheral or incidental transactions

A

losses

55
Q

net sales minus cost of foods sold

A

gross margin formula

56
Q

gross margin minus operating expenses

A

income from operations

57
Q

multiple step income statements reports nonoperating activities in a section which is frequently called other income and expenses

A

nonoperating activities

58
Q

subtracted from income operations to obtain income before taxes

A

net income

59
Q

return on sales, show the percentage of profit in each dollar of sales revenue
Computed as net income / sales revenue

A

net profit margin

60
Q

owners contribution through purchase of stock

A

direct contribution

61
Q

owner contribution by company retaining some of net income each year rather than paying dividends

A

indirect contribution

62
Q

used to monitor and evaluate a company’s dividend payout to its shareholders

A

retained earnings statement

63
Q

Describes the company’s cash receipts and cash payments over a period of time

A

statements of cash flow

64
Q

any cash flows directly related to earring income. This category includes cash sales and collections of accounts receivable as well as cash payments for goods, services , salaries and interest

A

cash flow from operating activities

65
Q

any cash flow related to the acquisition or sale of investment and long term assets such as property, plant and equipment.

A

cash flow from investing activities

66
Q

any cash flow related to obtaining capital of the company. This category includes the issuance and repayment of debt, stock transactions, and dividends

A

cash flow from financing activities

67
Q

Creditors use _______ statements to assess the creditworthiness of a company

A

Cash flow

68
Q

information is _____ if it helps user make business decisions by providing feedback about future decisions

A

relevant

69
Q

complete, unbiased, and free from error information

A

faithful representation

70
Q

_____ information allows users to compare similarities and difference between one another

A

comparability

71
Q

information is _______ when independent parties can agree on the measurement of the activity.

A

verifiability

72
Q

if it is available to users before it loses its ability to influence decisions.

A

timeliness

73
Q

if users who have a reasonable knowledge of accounting and business can, with reasonable study effort, comprehend the meaning of the information, it is considered

A

understandibility

74
Q

the benefit received from accounting information should be greater than the cost of providing that information.

A

cost constraint

75
Q

Examples: cash, accounts receivable, inventory, investments, equipment, etc.

A

assets

76
Q

accounts payable, notes payable, taxes payable, etc.

A

liabilities

77
Q

Contributed Capital: resources exchanged for ownership interest.

Retained Earnings: profits earned and retained in the business.

A

examples of equity

78
Q

are reported on the income statement. They increase net income and increase retained earnings.

A

revenues

accounting test 1 (6 decks)

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