ACCOUNTING 201 FINAL STORMBERG
2 rules of restricted cash - CORRECT ANSWER-1. when comp expects to use within
next year they report it as current asset 2. when not the case in 1, it is reported as a
concurrent asset
2 ways to increase return on investments - CORRECT ANSWER-1. increase margin
it generates for each dollar of goods sold 2. increase volume of goods sold
3 categories of inventory for manufacturing companies - CORRECT ANSWER-1.
raw materials 2. work in proces 3. finished goods in inventory
3 factors that affect computation of depreciation - CORRECT ANSWER-1. cost 2.
useful life 3. salvage value
3 features of allowance method - CORRECT ANSWER-1. companies estimate
uncollectible accounts receivable 2. companies debit bad debt expense and credit
allowance for doubtful accounts through adjusting entry 3. when a company writes
off a specific customer account, they debit uncollectible amounts for doubtful
accounts and credit accounts receivable
3 parties involved when national credit cards are used in making retail sales -
CORRECT ANSWER-1. credit card issuer 2. retailer 3. customer
3 steps for multi-step income statement - CORRECT ANSWER-1. subtract COGS
from net sales to find gross profit 2. deduct operating expenses to determine income
from operations 3. add/subtract the results of activities not related to operations to
income from operations to determine net income
5 principles of having adequate cash - CORRECT ANSWER-1. increase receivable
collection speed 2. keep inventory levels low 3. monitor payments of liabilities 4. plan
the timing of major expenditures 5. invest idle cash: be liquid (someone always
willing to buy and sell) and risk free (no concern of default) to avoid cash crises
5 Step Revenue Recognition Process - CORRECT ANSWER-1. identify the contract
with customers
2. identify the separate performance obligations in the contract
3. determine the transaction price
4. allocate the transaction price to the separate performance obligations
5. recognize revenue when each performance obligation is satisfied
,6 principles of control activities - CORRECT ANSWER-1. establishment of
responsibility
2. segregation of duties
3. documentation procedures
4. physical controls
5. independent internal verification
6. human resource controls
Accelerating Cash Receipts - CORRECT ANSWER-1) Size
2) Only reasonable source of cash
3) Billing and collection are often time consuming and costly
account - CORRECT ANSWER-individual accounting record of increases and
decreases in a specific asset, liability, SE, rev, or expense item
account receivable - CORRECT ANSWER-the company's right to collect cash in the
future
Accounting - CORRECT ANSWER-The information system that identifies, records,
and communicates the economic events of an organization to interested users.
Accounting Cycle - CORRECT ANSWER-begins with the analysis of business
transactions and ends with the preparation of a post-closing trial balance
Accounting Information System - CORRECT ANSWER-keeps track of various
business acitivities
accounting transactions - CORRECT ANSWER-occurs when assets, liabilities, or
stockholders' equity items change as a result of some economic event
Accrual Basis Accounting - CORRECT ANSWER-transactions that change a
company's financial statements are recorded in the periods in which the events occur
accruals - CORRECT ANSWER-accrued revenues and accrued expenses
accruals - CORRECT ANSWER-Expenses or revenues that are recognized at a date
earlier than the point when cash is exchanged. -> rev/exp first, cash later
accrued expenses - CORRECT ANSWER-expenses incurred but not yet paid in
cash or recorded
Accrued Revenues - CORRECT ANSWER-revenues for services performed but not
yet received in cash or recorded
, accumulative depreciation - CORRECT ANSWER-shows total amount of
depreciation
additions and improvements - CORRECT ANSWER-costs incurred to increase the
operating efficiency, productive capacity, or expected useful life of a plant asset
adjusted cash balance per books - CORRECT ANSWER-recorded after
reconciliation process
adjusted trial balance - CORRECT ANSWER-after a company has journalized and
posted all of the adjusting entries, it updates the trial balance to reflect the
adjustments that have been made
Adjusting Entry - CORRECT ANSWER-ensure that the revenue recognition and
expense recognition principles are followed
advantages of leasing - CORRECT ANSWER-1. reduced risk of obsolescence 2.
little or no down payment 3. shared tax advantages 4. assets and liabilities not
reported
after the 3 steps of the multi-step income statement you reach ___. - CORRECT
ANSWER-Income before tax
allowance for uncollectible accounts - CORRECT ANSWER-contra asset account
representing the amount of accounts receivable that we do not expect to collect ->
cash realizable value
amortization - CORRECT ANSWER-the process of allocating the cost of intangible
assets over their limited useful lives
annual recurring expenditures that do not benefit future periods - CORRECT
ANSWER-expenses
annual report - CORRECT ANSWER-a yearly statement of the financial condition,
progress, and expectations of an organization
asset normal balance - CORRECT ANSWER-debit
Asset Turnover - CORRECT ANSWER-net sales/average total assets
Assets - CORRECT ANSWER-resources owned by a business
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