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Oral Communication > Fundamentals of ABM 2 > Flashcards

Fundamentals of ABM 2 Flashcards

1
Q

It is also known as the balance sheet

A

SFP

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2
Q

It includes the amounts of the company’s total assets, liabilities and owner’s equity which
in totality provides the condition of the company on a specific date

A

SFP

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3
Q

The Statement of Financial Position usually consist of the following types of accounts:

A

PERMANENT ACCOUNTS; TEMPORARY ACCOUNTS; CONTRA-ASSET ACCOUNTS

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4
Q

Their balances remain intact from one accounting period to another.

A

Permanent accounts

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5
Q

They are called
___ because the accounts are retained permanently in the SFP until
their balances become zero.

A

Permanent accounts

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6
Q

These accounts will have zero balances at the end of
the accounting period.

A

Temporary accounts

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7
Q

Are accounts that are presented under the assets portion
of the SFP but are reductions to the company’s assets.

A

Contra-asset accounts

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8
Q

What are the contra-asset accounts?

A

Allowance for Doubtful Accounts; Accumulated Depreciation

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9
Q

is a contra asset to Accounts Receivable. This
represents the estimated amount that the company may not be able to collect from
delinquent customers.

A

Allowance for Doubtful Accounts

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10
Q

is a contra asset to the company’s Property, Plant and
Equipment. This account represents the total amount of depreciation booked against
the fixed assets of the company.

A

Accumulated Depreciation

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11
Q

What are the elements of the SFP?

A

Assets, Liabilities, and Owner’s Equity

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12
Q

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

A

Assets

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13
Q

are what the business owes or the claims against the business. They
present obligations arising from past events, the settlement of which is expected to
result in an outflow from the entity of resources embodying economic benefits {assets}

A

Liabilities

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14
Q

It is the residual interest
of the owner in the business (assets minus liabilities).

A

Owner’s Equity

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15
Q

What is the name of the capital account for a sole proprietorship? for a partnership? for a corporation?

A

SP - Owner’s equity
P - Partner’s equity
C - Stockholder’s equity

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16
Q

What are the examples of the accounts included in the stockholder’s equity?

A
  1. common stock,
  2. preferred stock,
  3. paid-in capital in excess of par value,
  4. paid-in capital
    from treasury stock,
  5. retained earnings,
  6. accumulated other comprehensive income
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17
Q

What are the classification of assets?

A

Current, Noncurrent

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18
Q

are assets that are expected to be converted to cash, sold or consumed
during the next 12 months or within the normal operating cycle of the business if it is
longer than 1 year.

A

Current assets

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19
Q

is the period it takes for an entity to buy its inventories, sell
them and collect the related receivables.

A

Normal operating cycle / accounting period (1 year)

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20
Q

What are the accounts under current assets?

A
  1. Cash and Cash Equivalents
  2. Trade Accounts Receivable
  3. Notes Receivable
  4. Interest Receivable
  5. Financial Assets at Fair Value through Profit or Loss (FAFVPL)
  6. Inventories
  7. Supplies
  8. Prepaid Assets
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21
Q

includes bills and coins on hand, bank accounts and operating funds/working
funds (e.g. petty cash fund)

A

Cash and Cash Equivalents

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22
Q

includes bills and coins on hand, bank accounts and operating funds/working
funds (e.g. petty cash fund)

A

Cash

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23
Q

is a short-term, highly liquid investments that is readily convertible
to known amounts of cash and which is subject to an insignificant risk of changes of
value.

A

Cash equivalent

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24
Q

is an amount owed by customers for goods bought or for
services received from the entity.

A

Trade accounts receivable

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25
Q

is an asset evidenced by another party’s written promise that entitles
you the receive cash in the future.

A

Notes receivable

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26
Q

Three elements of a promisory note:

A
  1. Principal amount
  2. Maturity date
  3. Corresponding interest rate
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27
Q

is the collectible amount due to the cost of borrowing money.

A

Interest receivable

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28
Q

is conventionally called
trading security. It is either a debt or an equity instrument of another entity by the
reporting entity.

A

Financial asset at fair value through profit or loss

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29
Q

What are the 3 items included under the Inventories account?

A
  1. Raw materials
  2. Work in progress OR Goods in progress
  3. Finished goods
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30
Q

are the goods for sale in the normal course of the business.

A

Finished goods

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31
Q

includes goods in the process of production

A

Work in progress

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32
Q

includes materials and supplies to be consumed in the production
process.

A

Raw materials

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33
Q

usually comprises office supplies to be consumed by the business.

A

Supplies and other prepaid assets

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34
Q

What are the accounts under the Noncurrent assets?

A
  1. Property, Plant and Equipment
  2. Intangible Assets
  3. Investment Properties
  4. Biological Assets
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35
Q

includes fixed assets used in the normal operating cycle
or production of the business.

A

Property, Plant and Equipment

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36
Q

What are the examples of Property, Plant and Equipment?

A
  1. Land
  2. Building
  3. Machinery
  4. Equipment
  5. Furniture and fixtures
  6. Leasehold improvements
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37
Q

are assets meeting the definition of an asset but without physical
substance.

A

Intangible assets

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38
Q

What are examples of Intangible assets?

A
  1. Copyright
  2. Brand name
  3. Franchise
  4. Trademark
  5. Good will
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39
Q

are long-lived assets not used in production, intended to be leased
out or for long-term asset appreciation

A

Investment Properties

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40
Q

living plants or animals held by the business for resale or
breeding Examples are sheep, trees in plantation, dairy cattle, pigs, bushes, figs and
fruit trees.

A

Biological assets

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41
Q

What are the classificsation of liabilities?

A

Current, Noncurrent

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42
Q

are debts that are due to be paid within one year or within the
entity’s operating cycle if the cycle is longer than a year.

A

Current liabilities

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43
Q

is an unwritten promise to pay a supplier for an asset
purchased or for a service rendered.

A

Trade accounts payable

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44
Q

is a formal written promise to pay a supplier or lender a specific sum of
money at a definite future time.

A

Notes payable

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45
Q

is related to a note payable since it is considered as cost for
borrowing money

A

Interest payable

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46
Q

is an expense that has been incurred but not yet paid in cash. The
most common examples of accrued expenses are salaries, rent and utilities.

A

Accrued expenses

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47
Q

is composed of taxes due to the government within one year. The
calculation of income tax payable is according to the prevailing tax law in the
Philippines.

A

Income tax payable

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48
Q

What are the accounts under Current Liabilities?

A
  1. Trade accounts payable
  2. Notes payable
  3. Interest payable
  4. Accrued expenses
  5. Income tax payable
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49
Q

are debts or financial
obligations that are expected to be paid after a year.

A

Noncurrent liabilities

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50
Q

represent bank loans as a source of financing for the entity. They can
be in a span of five years to twenty-five years.

A

Long-term debts

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51
Q

are a form of long-term debt usually issued by corporations and the
governments. The issuer to the bond makes a formal promise/agreement to pay interest
usually every six months (semiannually) and to pay the principal or maturity amount
at a specified date some years in the future.

A

Bonds payable

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52
Q

What are the accounts under Noncurrent liabilities?

A
  1. Loans payable
  2. Bonds payable
  3. Mortgage payable

(4). Long-term debts

53
Q

What is used in exchange of assurance in a mortgage?

A

Collateral

54
Q

What is composed in the heading of an SFP?

A

HEADING:
1. Company name
2. Statement of Financial Position
3. AS OF (year)

55
Q

informs the reader about the “performance” and activities of the company for a certain period

A

SCI

56
Q

It is also compared to a running video because it presents an entity’s activities form the start to the end of a period.

A

SCI

57
Q

Another meaning is it “contains the results of the company’s operations for a specific period of time

A

SCI

58
Q

This can be prepared for a month, a quarter or a year

A

SCI

59
Q

Other books define the income statement as the ______.

A

Profit and loss statement

60
Q

Temporary accounts are also known as

A

Nominal accounts

61
Q

At the end of the accounting period, balances under these accounts are transferred to the capital account.

A

Temporary accounts

62
Q

These accounts result zero to their beginning balances at the beginning of the following year.

A

Temporary accounts

63
Q

What are examples of temporary accounts?

A
  1. Revenue,
  2. sales,
  3. utilities expense,
  4. supplies expense
  5. salaries expense,
  6. depreciation expense,
  7. Interest expense
64
Q

What are the elements of an income statement?

A
  1. Title
  2. Revenues
  3. Expenses
  4. Gain and losses
  5. Other items
65
Q

They arise in the course of the ordinary activities of an entity

A

Revenues and expenses

66
Q

Revenues arise in the course of ____ of an entity.

A

ordinary activities

67
Q

What are the different names referred to under Revenues?

A
  1. Sales,
  2. Fees,
  3. Interest,
  4. Dividend,
  5. Royalties,
  6. Rent
68
Q

are the first line item in the Statement of Comprehensive Income

A

Revenues

69
Q

A small retail store has ____ as its main revenue.

A

Sales

70
Q

Revenues may also come from interest from _____.

A

Time deposits and dividends earned from shares of stocks

71
Q

____ from individuals who would like to use their established brand and technology.

A

Royalties

72
Q

Owners of fixed properties (e.g. land and building) may charge third parties with ___.

A

Rent

73
Q

Entities engage in service business use ___ as revenue account.

A

Service income

74
Q

Expenses arise in the course of the ordinary activities of the entity include, for example:

A
  1. Cost of sales
  2. Wages
  3. Depreciation
75
Q

They usually take the form of an outflow or depletion of asset such as cash and cash equivalent, inventory, property, plant, and equipment.

A

Expenses

76
Q

For service entities, expenses are categorized as

A

Cost of service / Operating expense

77
Q

include rent for office space, salaries for office staff, permits to local government chapters, depreciation of office equipment, and other similar expenses.

A

Operating expense / Cost of service

78
Q

For a merchandising concern, the expenses are classified as

A

Cost of sales / Selling expenses
and Administrative (selling) expenses

79
Q

is the direct cost of the products sold or the amount paid or payable by the business entity to its suppliers for the merchandise sold to the business then to then sold to the entity’s customers.

A

Cost of sales

80
Q

represent other items that meet the definition of income and may not, arise in the course of the ordinary activities of an entity.

A

Gains

81
Q

represent other items that meet the definition of expenses and may or may not arise in the course of the ordinary activities of the entity.

A

Losses

82
Q

Other items included in the computation of the total comprehensive income are

A
  1. Other Comprehensive Income
  2. Income Taxes
83
Q

is the sum of money payable to the government.

A

Income tax

84
Q

are increases or decreases in economic benefit for a period.

A

Items of other comprehensive income / Comprehensive income

85
Q

What are the 2 types of SCI?

A

Single-step, Multi-step format

86
Q

It is called ___ because all revenues are listed down in one section while all expenses are listed in another.

A

Single-step

87
Q

Net income is computed using a “single-step” which is

A

Total revenues minus total expenses

88
Q

It is called _____ because there are several steps needed in order to arrive at the company’s net income.

A

Multi-step

89
Q

What is the difference between the SCI of a a service business and a merchandising business?

A

The main difference lies on how they generate their revenue.

90
Q

A service company provides ____ in order to generate revenue

A

Services

91
Q

Service business: the main cost associated with their service is the ____

A

Cost of labor

92
Q

Cost of labor is recorded under

A

Salaries expense

93
Q

a _____ company sells goods to customers and the main cost associated with the activity is the ____

A

Merchandising; Cost of merchandise

94
Q

Cost of merchandising is recorded under ___

A

Cost of Goods Sold

95
Q

is determined by deducting the operating expenses from professional fees.

A

Operating income

96
Q

In the service industry, the account __ is the appropriate revenue classification

A

Professional Fees

97
Q

A merchandising entity earns its revenue by selling products, called _____.

A

Merchandise or merchandise inventory

98
Q

A merchandising firm may be a __ or a ___.

A

Wholesaler; Retailer

99
Q

They buy goods for resale to retailers

A

Wholesalers

100
Q

They buy goods for resale to their customers

A

Retailers

101
Q

How is the net income solved in a service business?

A

Revenues Earned - Operating Expenses

102
Q

How is the net income soloved in a merchandising business?

A

Sales
Less: COGS
= Gross Profit
Less: Operating Expenses
= Net Income

103
Q

Merchandise on hand (not sold) at the end of an accounting period is called

A

Merchandise inventory

104
Q

Merchandise inventory is reported as a ____ on the balance sheet.

A

Current asset

105
Q

Formula: Net Sales
Preparing a Statement of Comprehensive Income for a Merchandising Concern

A

Sales
Less: Sales Discounts
Less: Sales Returns and Allowances
= Net Sales

106
Q

the total amount of revenue that the company was able to generate from selling products

A

Sales

107
Q

are called contra because it is on the opposite side of the sales account.

A

Contra-revenue accounts

108
Q

This account is debited in order to record returns of customers or allowances for such returns.

A

Sales returns and allowances

109
Q

This is where discounts given to customers who pay early are recorded.

A

Sales discounts

110
Q

Net Sales Formula for SCI merchandising business

A

Sales
Less: Sales returns
Less: Sales discounts

111
Q

Net Purchases formula:

A

Purchases
Add: Freight-In
Less: Purchase Discounts
Less: Purchase Returns and Allowances
= Net Purchases

112
Q

amount of goods bought during the current accounting period

A

Purchases

113
Q

An account that is credited being “contrary” to the normal balance of Purchases account.

A

Contra-purchases

114
Q

Account used to record early payments by the company to the suppliers of merchandise.

A

Purchase discount

115
Q

Account used to record merchandise returned by the company to their suppliers.

A

Purchase returns and allowances

115
Q

This account is used to record transportation costs of merchandise purchased by the company.

A

Freight in

116
Q

Formula:
Cost of Sales or COGS

A

Beginning Inventory
Add: Net Purchases
= Total Goods Available for Sale
Less: Ending Inventory
= COGS

117
Q

This is the amount of inventory at the beginning of the accounting period

A

Beginning inventory

118
Q

This is also the amount of ending inventory from the previous period.

A

Beginning inventory

119
Q

amount if inventory presented in the Statement of Financial Position. Total cost of inventory unsold at the end of the accounting cycle.

A

Ending inventory

120
Q

Formula:
Gross Profit

A

Net Sales
Less: Cost of Sales
= Gross Profit

121
Q

These expenses are those that are directly related to the main purpose of a merchandising business: the sale and delivery of merchandise.

A

Selling expenses

122
Q

What are the examples of Selling expenses?

A
  1. Freight out
  2. Salaries expense
  3. Rent Expense
  4. Utilities expense
  5. Depreciation expense
123
Q

These expenses are not directly related to the merchandising function of the company but are necessary for the business to operate effectively.

A

General and Administrative expenses

124
Q

What are the examples of General and Administrative expenses?

A
  1. Salaries expense
  2. Utilities expense
  3. Repairs and maintenance
  4. Depreciation
  5. Permit and Licenses
  6. Miscellaneous expense
125
Q

FINAL FORMULA:
Net income / Total Comprehensive Income

A

Net Sales
Less: Cost of Sales
= Gross Profit
Less: Selling Expenses
Less: General and Administrative Expenses
= Net Income or Total CI

126
Q

FORMULA: ENDING CAPITAL

A

Beginning Capital
Add: Net income
= Total
Less: Withdrawals
= Ending Capital

127
Q

What is the proof that an investor bought shares of a company?

A

Stock certificate

128
Q

Income received by a shareholder

A

Dividen

Oral Communication (3 decks)

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