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A311 Intermediate Accounting > test 1 > Flashcards

test 1 Flashcards

0
Q

relevance

A

pertinent to the decision making at hand

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1
Q

predictive value

A

information is useful in predicting the future

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2
Q

timeliness

A

information is available prior to the decision

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3
Q

distribution to owners

A

decreases in equity resulting from transfers to owners

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4
Q

confirmatory value

A

information confirms expectations

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5
Q

understandability

A

users understand the information in the context of the decision being made

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6
Q

gain

A

results if an asset is sold for more than its book value

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7
Q

faithful representation

A

agreement between a measure and the phenomenon it purports to represent

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8
Q

comprehensive income

A

the change in equity from non owner transactions

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9
Q

materiatlity

A

concerns the relative size of an item and its effect on decisions

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10
Q

comparability

A

important for making inter firm comparisons

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11
Q

neutrality

A

the absence of bias

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12
Q

recognition

A

the process of admitting information into financial statements

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13
Q

consistency

A

applying the same accounting practices over time

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14
Q

cost effectiveness

A

requires consideration of the cost and value of information

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15
Q

verifiablility

A

implies consensus among different measures

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16
Q

economic entity assumption

A

all economic events can be identified with a particular entity

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17
Q

going concern assumption

A

assumes the entity will continue indefinitely

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18
Q

periodicity assumption

A

relates to the qualitative characteristic of timeliness

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19
Q

monetary unit assumption

A

inflation causes a violation of this assumption

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20
Q

historical cost principle

A

the basis for measurement of many assets and liabilities

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21
Q

realization principle

A

revenue is recognized only after certain criteria are satisfied

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22
Q

matching principle

A

cause-and-effect relationship between revenues and expenses

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23
Q

full-disclosure principle

A

information that could affect decision making should be reported

24
Q

cost effectiveness

A

the benefit of providing accounting information should exceed the cost of doing so

25
Q

materiality

A

a consequence is that gaap need not be followed in all situations

26
Q

conservatism

A

not a qualitative characteristic, but a practical justification for some accounting choices

27
Q

rate of return

A

dividends + share price appreciation / initial investment = %

28
Q

cash basis accounting

A

reflects net operating cash flow = difference in cash receipts and cash pymnts

29
Q

accrual accounting

A

net income = revenue - expenses

30
Q

SEC

A

securities and exchange commission authority to set accounting and reporting standards

31
Q

FASB

A

finaincail accounting standards board

32
Q

the primary objective of financial reporting is to provide information

A

useful to capital providers

33
Q

statements of financial accounting concepts issued by the FASB

A

identify the conceptual framework within which accounting standards are developed

34
Q

in general, revenue is recognized as earned when the earning process is virtually complete and

A

there is reasonable certainty as to the collectibility of the asset to be received

35
Q

in depreciating the cost of an asset, accountants are most concerned with

A

the matching principle

36
Q

the primary objective of the matching principle is to

A

record expenses in the period that related revenue are recognized

37
Q

true or false

the separate entity assumption states that, in the absence of contrarry eevidence, all entities will survive indefinitely

A

false

going concern

38
Q

order of the income statement

A

sales revenue
cogs
gross profit

ops expense:
salaries
supplies
rent
depreciation
   total ops expense
operating income
other income (expense):
rent revenue
interest expense
net income
39
Q

order of the balance sheet

A 
current assets:
  cash
  short-term investments
  ar
  supplies
  inventory
  prepaid rent
     total ca

Investments:
Marketable securities
Land held for sale
Total investments

PP&E:
  land
  Bldgs
  Equipment
  Less: accum deprec'n
     Total PP&E

Intangible assets:
Patents
Total intangible assets

total assets

current liab:
  ap
  salaries payable
  unearned rent revenue
  interest payable
  note payable
     total cl
long-term liab:
  note payable
shareholder equity:
  common stock, 6,000 shares issued & outstanding
  retained earnings
     total shareholder equity
          total liab & equity
40
Q

retained earnings consist of

A

beginning retained earnings + net income - dividends

41
Q

Cash & cash equivalents

A

Cash on hand and in bank
Checks and money orders
Negotiable items- commercial paper, money market, us treasury bills
Investments maturity less than 3 mo.
Credit card receivables, due from banks 3 mo or less

42
Q

Short- term investments

A

Temp or short term marketable securities

Stock or debt securities intended to sale within 12 mo

43
Q

Long-term investments

Also just investment section

A

Stock over 1 yr intent
Cash accumulated to pay debt in five yrs
Non current receivables 61 days or older

44
Q

Accounts receivable

A

Sale of goods or services on credit
Due in 30 to 60 days

Net allowance for uncollectible amts

45
Q

Inventories

A

Finished goods, wip, raw materials

46
Q

Prepaid expense

A

Current asset under 1 yr

Non current asset over 1 yr

47
Q

PP&E

A

Tangible, long lived, used in business

48
Q

Intangible assets

A

No physical substance

49
Q

Other assets

A

Long term prepaids aka Deferred charges

Non current assets not in other cats

50
Q

Current liabilities

A

Ap, notes payable (shortterm borrowings), unearned revenues, accrued, current maturity of debt

30-60 day payment due

Notes payable is 1 yr

Reclass portions of long term notes, loans, mtgs,bonds payable when pymnts due in current year as current liab

51
Q

Noncurrent liabilities

A

Payables over 1 yr

52
Q

Paid in capital

A

Common stock
Preferred stock
Treasury stock

53
Q

Retained earnings

A

= Beginning RE + rev - expense

54
Q

Calculate cost of goods sold

A

Beg. Inv + purchases - end inv.

55
Q

Liquidity ratios

A

Quick ratio & current ratio

56
Q

Current ratio

A

Current assets/current liabilities

57
Q

Quick or acid ratio

A

Quick assets (exclude prepaid & inventories)/ current liabilities

58
Q

Debt to equity ratio

A

Total liabilities / total equity

A311 Intermediate Accounting (4 decks)

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