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Acctg 101 > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

is the
source of financing for the
assets of the enterprise.

A

Financial structure

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2
Q

It indicates what amount of
assets has been financed by
creditors, which is borrowed
capital, and what amount of
assets has been financed by
owners, which is invested capital.

A

Financial structure

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3
Q

Significance:
Useful in predicting future
borrowing needs and how future
profits and cash flows will be
distributed among those with an
interest in the enterprise.

A

Financial structure

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4
Q

Significance: Useful in predicting how
successful the enterprise is
likely to be raising further finance.

A

Financial structure

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5
Q

refers to the
availability of cash in the near
future after taking account of
financial commitments over this
period.

A

Liquidity

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6
Q

Significance:
Useful in predicting the ability of
the enterprise to meet its short-term
financial commitments as they fall
due.

A

Liquidity

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7
Q

refers to the
availability of cash over the
longer term to meet financial
commitments as they fall due.

A

Solvency

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8
Q

Significance:
Useful in predicting the ability of
the enterprise to meet its longterm financial commitments as
they fall due.

A

Solvency

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9
Q

the
ability of the enterprise to use
its available cash for
unexpected requirements and
investment opportunities.

A

Capacity for Adaptation

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10
Q

Compositions of statement of financial position

A

assets, liabilities, owner’s equity

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11
Q

These are resources controlled
by the enterprise as a result of
past events and from which future
economic benefits are expected
to flow to the enterprise.

A

assets

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12
Q

the time
between the acquisition of assets
for processing and their realization
in cash or cash equivalents.

A

operating cycle

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13
Q

classification of current assets

A

a. It expects to realize the asset, or
intends to sell or consume it, in its
normal operating cycle;
b. It holds the asset primarily for the
purpose of trading;
c. It expects to realize the asset
within twelve months after the
reporting period;
d. The asset is cash or cash
equivalent unless the asset is
restricted from being exchanged or
used to settle a liability for at least
months after the reporting period.

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14
Q

7 current assets

A

cash, cash equivalents, accounts receivable, note receivable, inventory or merchandise inventory, supplies, prepaid expense

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15
Q

Any medium of exchange that a
bank will accept for deposit at face
value.

A

cash

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16
Q

a document which
can be bought as a way of sending
money through the post.

A

money order

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17
Q

These are short-term, highly
liquid investments that are
readily convertible to known
amounts of cash and which are
subject to an insignificant risk of
changes in value

A

cash equivalents

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18
Q

These are claims against
customers arising from sale of
services or goods on credits.

A

account receivable

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19
Q

a written
pledge that the customer will
pay the business a fixed
amount of money on a certain
date.

A

note receivable

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20
Q

These are assets which are
(a) held for sale by the company,
(b) in the process of production for
such sale,
(c) in the form of materials (raw
materials) or supplies to be
consumed in the production.

A

inventory or merchandise inventory

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21
Q

This may be office supplies like
bond papers, paper clips and the
like or can be also store supplies
like boxes, bags, packaging
tapes and other related
materials.

A

supplies

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22
Q

These are expenses paid for by
the business in advance.

A

prepaid expenses

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23
Q

It is an asset because the
business avoids, having to pay
cash in the future for a specific
expense.

A

Prepaid expense

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24
Q

what are the 3 non current assets

A

ppe, accumulated depreciation, intangible

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25
Q

these are tangible assets
that are held by an enterprise
for use in the production or
supply of goods or in rendering
services, or for rental to other, or
for administrative purposes and
which are expected to be used
during more than one period.

A

ppe

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26
Q

These are:
a. Land
b. Building
c. Office Equipment
d. Furniture and Fixtures
e. Delivery Equipment
f. Store Equipment
g. Service Vehicle

A

ppe

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27
Q

applies to property, plant and
equipment except land as a
contra account that contains
the sum of periodic
depreciation charges.

A

accumulated depreciation

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28
Q

The reflected amount is deducted
from the cost of the related
asset to obtain book value.

A

accumulated depreciation

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29
Q

These are identifiable,
nonmonetary assets without
physical substance held for use
in the production or supply of
goods or services, for rentals to others or for administrative purposes

A

intangible

30
Q

These are:
a. Goodwill
b. Patents
c. Copyrights
d. Licenses
e. Franchises
f. Trademarks
g. Brand names

A

intangible

31
Q

A present obligation* of the
enterprise arising from past
events, the settlement of which is
expected to result in an outflow
from the enterprise of resources
embodying can be measured
benefits.

A

liabilities

32
Q

This
could be a transfer of cash, or
another property, the provision of
a service or the refraining from
activities which would otherwise
be profitable.

A

transfer economic benefits

33
Q

classification of current liabilities

A

a.It expects to settle the liability
in its normal operating cycle
b. It holds the liability primarily for
the purpose of trading
c. The liability is due to be settled
within twelve months after the
reporting period; or
d. The entity does not have an
unconditional right to defer
settlement of the liability for at
least twelve months after the
reporting period.

34
Q

This account represents the
reverse relationship of the
accounts receivable

A

accounts payable

35
Q

Due to suppliers of goods and other assets purchased on credit.

A

account payable

36
Q

like a note
receivable but in a reverse
sense.

A

notes payable

37
Q

The business entity is the
maker of the note; that is,
the entity is the party who
promises to pay in a
specified amount of money
on specified future date.

A

notes payable

38
Q

Amounts owed to others for
unpaid expenses

A

accrued liabilities

39
Q

This account includes:
a. Salaries payable
b. Utilities payable
c. Interest payable
d. Taxes payable

A

accrued liabilities

40
Q

When the business entity
receives payment before
providing its customers with
goods or services.

A

unearned revenues

41
Q

These are portions of long-term
liabilities which are to be paid
within one year from the
balance sheet date.

A

current portion of long term debt

42
Q

This account records long-term
debt of the business entity for
which the entity has pledged
certain assets as security to
the creditor.

A

mortgage payable

43
Q

This is an obligation in
connection with the bond, a
contract between the issuer and
the lender specifying the terms of
repayment and the interest to be
charged.

A

bonds payable

44
Q

the residual
interest in the asset of an entity
that remains after deducting all its
liabilities.

A

equity

45
Q

This account is used to record
original and additional
investment of the owner of the
business entity.

A

capital

46
Q

When the owner of a business
entity withdraws cash or other
assets, such are recorded in the
drawing or withdrawal account
rather than directly reducing the
owner’s equity account.

A

withdrawals

47
Q

It is a temporary account used at
the end of the accounting period
to close the income and
expenses.

A

income summary

48
Q

This account shows the profit
or loss for the period before
closing to the capital account.

A

income summary

49
Q

comprise its revenue, expenses,
net income or loss for a period of
time

A

performance of an enterprise

50
Q

It is the level of income earned by the enterprise through efficient and effective use of its resources.

A

performance of an enterprise

51
Q

recognizes transactions and other events of a reporting entity in the periods in which those effects occur, even if the resulting cash receipts and payments occur in a different period

A

Accrual Accounting

52
Q

Composition of Statement of financial performance

A

Revenue or Income, Expense

53
Q

These are increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decrease of liabilities from delivery or production of goods, rendering of services, or other activities that constitute the enterprise’s major operations.

A

Revenue or Income

54
Q

Revenues earned by performing services for a customer or client, for e.g. accounting services by a CPA firm, laundry services by a laundry shop.

A

Service Income

55
Q

Earned as a result of sale of merchandise; for e.g. sale of merchandise by General Merchandise Store.

A

Sales revenue

56
Q

what are the two different revenue or income?

A

service income, sales revenue

57
Q

what are the 9 different expenses?

A

CSURSIDUI - cost of sales, salaries and wages, utilities, rent, supplies, insurance, depreciation, uncollectable account, interest expense

58
Q

These are decrease in economic benefits during the period in the form of outflows or using up of assets or incurrence of liabilities that result in decreases in equity, other than relating to distributions to equity participants.

A

Expense

59
Q

The cost incurred to purchase or to produce the products sold to customers during the period; also called as cost of goods sold.

A

Cost of Sales

60
Q

Includes all payments as a result of an employer-employee relationship such as salaries and wages, 13th month pay, cost if living allowances, other related benefits.

A

Salaries and Wages Expenses

61
Q

Expenses related to use of telecommunications facilities, consumptions of electricity, fuel and water.

A

Utilities expense

62
Q

Expense for space, equipment or other asset rentals.

A

Rent expense

63
Q

Expense of using supplies in the conduct of daily business.

A

Supplies expense

64
Q

Portion of premiums paid on insurance coverage which has expired.

A

Insurance expense

65
Q

Portion of the cost of a tangible asset allocated or charged as expense during an accounting period.

A

Depreciation expense

66
Q

The amount of receivables estimated to be doubtful of collection and charged as expense during an accounting period.

A

Uncollectible expense

67
Q

An expense related to use of borrowed funds.

A

Interest expense

68
Q

It is composed of assets, liabilities and owner’s equity.

A

Financial position

69
Q

The level of income earned by the enterprise through efficient and effective use of its resources.

A

Financial performance

70
Q

Composed of revenue or income and expenses.

A

Financial performance

Acctg 101 (6 decks)

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