Integrated Accounting for Business 2 Flashcards
Accounts Receivable and Allowance for Bad Debts (AFBD) are ________
Contra-assets
5 Classifications of Partnership: According to Legality of Existence
a. SEC (Security and Exchange Commission) compliant of all legal requirements
b. doesn’t comply to legal requirements to SEC
a. De Jure
b. De Facto
profits/gain will continue to operate
Going Concern
3 Elements of Contract:
- Consent
- Object
- Cause
is estimated selling price less estimated costs of completion and costs to sell.
Net Realizable Value (NVR)
What does it mean by capital contributions?
Money / Property
10 Characteristics: It requires less formality
Ease of Formation
10 Characteristics: partnership can transact and acquire properties in its name. (Judicial Personality and Legal Personality)
Separate Legal Personality
True or False: Each partner’s capital account is debited for the fair value of his net contributions.
False. Must be credited.
True or Flase: Unlimited life and limited liability are advantages of a partnership over corporations.
False
True or False: A partner has no right to possess a partnership property for any other purpose without the consent of his partners.
True
What does it mean by industry?
Labor/skills
2 Methods of Average Capital
- Months unchanged method
- Months outstanding method
capital contributions from the date of partnership formation
Original Capital
_______ is recorded on the credit side of an account. Any increase is also recorded on the credit side. Any decrease is recorded on the debit side. (minus)
Capital
Kind of partner participating actively and is not known by public
Secret
Capital Contribution in the beginning of the year or the reporting period
Beginning Capital
Does industrial partners share in losses?
No
Accounting for initial investments to the partnership
Formation
Contracts may be _______ or _______.
Written or Verbal
Division of profits and losses
Operation
How many persons can be in a partnership?
No limitations. Just two or more
5 Classifications of Partnership: According to Duration
a.
b.
a. Fixed Term
b. At will
an artificial being created by operation of law having the right of succession with the powers, attributes, and properties granted by the law or inherent to its existence.
Corporation
3 Steps:
- To adjust the sole proprietor’s books. (fair value)
- To close the sole proprietor’s books.
▪ Debit all accounts with credit balances.
▪ Credit all accounts with debit balances. - Record contributions in partnership policies.