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ACC 121 > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

A balance sheet that contains standard classifications or sections.

A

Classified balance sheet

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2
Q

Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent owner’s equity account, Owner’s Capital.

A

Closing entries

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3
Q

Entries to correct errors made in recording transactions.

A

Correcting entries

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4
Q

Assets that a company expects to convert to cash or use up within one year or its operating cycle, whichever is longer.

A

Current assets

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5
Q

Obligations that a company expects to pay within the coming year or its operating cycle, whichever is longer.

A

Current liabilities

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6
Q

A temporary account used in closing revenue and expense accounts.

A

Income Summary

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7
Q

Long-lived assets that do not have physical substance.

A

Intangible assets

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8
Q

The ability of a company to pay obligations expected to be due within the next year.

A

Liquidity

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9
Q

Generally, (1) investments in stocks and bonds or other companies that are normally held for many years; (2) long-term assets, such as land and buildings, not currently being used in operating activities; and (3) long-term notes receivable.

A

Long-term investments

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10
Q

Obligations that a company expects to pay after one year.

A

Long-term liabilities

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11
Q

The average time that it takes to purchase inventory, sell it on account, and then collect cash from customers.

A

Operating cycle

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12
Q

Accounts that relate to one or more future accounting periods. Consist of all balance sheet accounts. Balances are carried forward to the next accounting period.

A

Permanent (real) accounts

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13
Q

A list of permanent accounts and their balances after a company has journalized and posted closing entries.

A

Post-closing trial balance

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14
Q

Assets with relatively long useful lives that are currently being used in operations.

A

Porperty, plant, and equipment

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15
Q

An entry, made at the beginning of the next accounting period, that is the exact opposite of the adjusting entry made in the previous period.

A

Reversing entry

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16
Q

The ownership claim of shareholders on total assets. It is to a corporation what owner’s equity is to a proprietorship.

A

Stockholders’ equity

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17
Q

Accounts that relate only to a given accounting period. Consist of all income statement accounts, the Owner’s Drawings account, and the Income Summary account. All temporary accounts are closed at the end of the accounting period.

A

Temporary (nominal) accounts

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18
Q

A multiple-column form that may be used in making adjustments and in preparing financial statements.

A

Worksheet

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19
Q

Step 1 in the Accounting Cycle

A

Analyze Business Transactions

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20
Q

Step 2 in the Accounting Cycle

A

Journalize the Transactions

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21
Q

Step 3 in the Accounting Cycle

A

Post to the Ledger Accounts

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22
Q

Step 4 in the Accounting Cycle

A

Prepare a Trial Balance

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23
Q

Step 5 in the Accounting Cycle

A

Journalize and Post Adjusting Entries (Deferrals/Accruals)

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24
Q

Step 6 in the Accounting Cycle

A

Prepare Adjusted Trial Balance

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25
Q

Step 7 in the Accounting Cycle

A

Prepare Financial Statements

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26
Q

Step 8 in the Accounting Cycle

A

Journalize and Post Closing Entries

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27
Q

Step 9 in the Accounting Cycle

A

Prepare a Post-Closing Trial Balance

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28
Q

An account that is offset against a revenue account on the income statement.

A

Contra-revenue account.

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29
Q

The total cost of merchandise sold during the period.

A

Cost of goods sold.

30
Q

Freight terms indicating that the seller places the goods free on board to the buyer’s place of business, and the seller pays the freight costs. $ considered an expense. Ownership of the goods remains with the seller until the goods reach the buyer.

A

FOB (free on board) Destination

31
Q

Freight terms indicating that the seller places the goods free on board the carrier, and the buyer pays the freight costs. $ considered inventory. The ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller.

A

FOB (free on board) Shipping point

32
Q

The excess of sales revenue over the cost of goods sold.

A

Gross profit

33
Q

Gross profit expressed as a percentage, calculated by dividing the amount of gross profit by net sales.

A

Gross profit rate

34
Q

Income from a company’s principal operating activity, determined by subtracing cost of goods sold and operating expenses from net sales.

A

Income from operations

35
Q

The asset that represents the merchandise the companies buy and sell to customers.

A

Inventory

36
Q

An income statement that shows several steps in determining net income.

A

Multi-step income statement

37
Q

Sales revenue less sales returns and allowances and sales discounts.

A

Net sales.

38
Q

Various revenues, expenses, gains, and losses that are unrelated to a company’s main line of operations.

A

Nonoperating activities.

39
Q

Expenses incurred in the process of earning sales revenue.

A

Operating expenses.

40
Q

A nonoperating-activities section of the income statement that shows expenses and losses unrelated to the company’s main line of operations.

A

Other expenses and lossed.

41
Q

A nonoperating-activities section of the income statement that shows revenues and gains unrelated to the company’s main line of operations.

A

Other revenues and gains.

42
Q

An inventory system under which the company does not keep detailed inventory records in the Inventory account throughout the accounting period but determines the cost of goods sold only at the end of an accounting period.

A

Periodic inventory system

43
Q

An inventory system under which the company keeps detailed records of the cost of each inventory purchase and sale in the Inventory account, and the records continuously show the inventory that should be on hand.

A

Perpetual inventory system

44
Q

A deduction made to the selling price of merchandise, granted by the seller so that they buyer will keep the merchandise.

A

Purchase allowance.

45
Q

A cash discount claimed by a buyer for prompt payment of a balance due.

A

Purchase discount

46
Q

A document that supports each credit purchase.

A

Purchase invoice.

47
Q

A return of goods from the buyer to the seller for a cash or credit refund.

A

Purchase return.

48
Q

A reduction given by a seller for prompt payment of a credit sale.

A

Sales discount

49
Q

A document that supports each credit sale.

A

Sales invoice

50
Q

Purchase returns and allowances from teh seller’s perspective.

A

Sales returns and allowances

51
Q

The primary source of revenue in a merchandising company.

A

Sales revenue (sales)

52
Q

An income statement that shows only one step in determining net income.

A

Single-step income statement.

53
Q

Inventory costing method that uses the weighted-average unit cost to allocate to ending inventory and cost of goods sold the cost of good available for sale.

A

Average-cost method

54
Q

Goods held for sale by one party although ownership of the goods is retained by another party.

A

Consigned goods

55
Q

Dictates that a company use the same accounting principles and methods from year to year.

A

Consistency concept

56
Q

Measure of the average number of days inventory is held: calculated as 365 divided by inventory turnover.

A

Days in inventory

57
Q

Manufactured items that are completed and ready for sale.

A

Finished goods inventory

58
Q

Inventory costing method that assumes that the costs of the earliest goods purchased are the first to be recognized as cost of goods sold.

A

First-in, first-out (FIFO) method

59
Q

A method for estimating the cost of the ending inventory by applying a gross profit rate to net sales and subtracting estimated cost of goods sold from cost of goods available for sale.

A

Gross profit method

60
Q

A ratio that measures the number of times on average the inventory is sold during the period; computed by dividing cost of goods sold by the average inventory during the period.

A

Inventory turnover

61
Q

Inventory system in which companies manufacture or purchase goods only when needed for use.

A

Just-in-time (JIT) inventory

62
Q

Inventory costing method that assumes the costs of the latest units purchased are the first to be allocated to cost of goods sold.

A

Last-in, first-out (LIFO) method

63
Q

A basis whereby inventory is stated as the lower of either its cost or its net realizable value.

A

Lower-of-cost-or-net realizable value (LCNRV)

64
Q

Inventory costing method in which a new weighted-average unit cost is computed after each purchase, by dividing the cost of goods available for sale by the units on hand.

A

Moving-average method

65
Q

Net amount that a company expects to realize (receive) from the sale of inventory. Specifically, it is the estimated selling price in the normal course of business, less estimated costs to complete and sell.

A

Net realizable value

66
Q

Basic goods that will be used in production but have not yet been placed into production.

A

Raw materials

67
Q

A method for estimating the cost of the ending inventory by applying a cost-to-retail ratio to the ending inventory at retail.

A

Retail inventory method.

68
Q

An actual physical flow costing method in which items still in inventory are specifically tracked and costed to arrive at the total cost of the ending inventory.

A

Specific identification method

69
Q

Average cost that is weighted by the number of units purchased at each unit cost.

A

Weighted-average unit cost

70
Q

That portion of manufactured inventory that has been placed into the production process but is not yet complete.

A

Work in process

ACC 121 (4 decks)

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