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Acct 3001 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

What has immaterial difference between present and maturity value, with short periods on financial statements?

A

current liabilities

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2
Q

Gain contingency occurs when

A

probable favorable outcome.

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3
Q

What is necessary to exclude short-term obligation from current liabilities?

A

contractual right to defer settlement for at least one year

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4
Q

Comparing income statement of one company to its previous periods is likely for _____.

A

evaluating past performance

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5
Q

Liquidation of a companies current liabilities is reasonably expected within the ________.

A

operating cycle

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6
Q

What is ARO?

A

Asset Retirement Obligation

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7
Q

How is a rebate expense recorded?

A

Expense is cost of anticipated redemptions. Liability is difference between anticipated amount and actual amount.

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8
Q

Are gain contingencies recorded?

A

no

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9
Q

Assurance warranty method should be used when warranty is _________.

A

integral and inseparable part of the sale

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10
Q

Losses related to receivable collections and related to warranties are _____.

A

accrued

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11
Q

Current ratio =

A

current assets / current liabilities, measures liquidity

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12
Q

Acid test =

A

(cash + AR) / current liabilities similar to current ratio, without inventory or prepaid expenses

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13
Q

Are after costs usually significant?

A

Yes

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14
Q

In accounting, litigation is litigation and the type is _____.

A

irrelevant

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15
Q

What are after costs?

A

costs incurred after sale, incident to correction of defects

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16
Q

Face value, length of term of bond and par value are needed for _____.

A

unamortized discount

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17
Q

Use the note’s interest rate or the market/similar interest rate to discount to PV?

A

market/similar risk

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18
Q

Reporting requirements for LT Debt

A

Fair value, sinking fund payments, maturity amounts for next 5 years, and assets securing debt

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19
Q

‘Discount on Bonds Payable’ is shown as what on the balance sheet?

A

deduction from Bonds Payable

20
Q

JE for interest on bonds purchased between interest dates:

A

Cash

- -     Bonds Payable   - -       Interest Expense
21
Q

How do bond purchasers receive interest between interest dates?

A

They pay the seller the interest accrued from last date to present, then receive full payment at next period.

22
Q

Debenture Bond

A

unsecured

23
Q

Junk Bond

A

unsecured, like debenture, but very risky

24
Q

Term bond

A

mature on single date

25
Q

Serial bonds

A

mature in installments

26
Q

Deep Discount bond

A

dont bear interest, aka zero-interest debenture

27
Q

Income Bond

A

pays no interest unless company is profitable

28
Q

Bond issued at ‘103’ means

A

103% of par value

29
Q

Does carrying amount affect reacquisition price?

A

no

30
Q

effective interest method

A

carrying value x effective interest rate

31
Q

Refunding

A

replacement of a bond with a new one

32
Q

If there is no market and no fair value of a debt instrument, how do we determine the PV?

A

Imputation

33
Q

Is the stated interest rate needed to calculate loss on redemption?

A

No

34
Q

Unamortized premium is ______ to face value to find net carrying amount.

A

added

35
Q

Unamortized discount is ______ to face value to find net carrying amount.

A

subtracted

36
Q

gain/loss is difference between __________.

A

Carrying amount and reacquisition price

37
Q

Trading on the equity means:

A

using borrowed money or preferred stock to make gain

38
Q

Issuing dividend ____ common stock and _____ paid-in-capital.

A

increase, increase

39
Q

Cost method debits treasury stock for _______.

A

reacquisition price

40
Q

If you are worried about a takeover event, you will _______ treasury stock.

A

buy back

41
Q

Stockholders equity will grow with ______.

A

prrofitability

42
Q

Callable preferred stock is a part of _____.

A

stockholders equity

43
Q

Liquidating dividend

A

not based on RE; return on stockholder’s investment

44
Q

Common stock Div’s distributable is what type of acct?

A

addition to capital stock

45
Q

A stock Div only affects what account?

A

stockholder’s equity

46
Q

What preferences should be disclosed in the balance sheet?

A

liquidation

Acct 3001 (2 decks)

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