Koofers

Final Vocab - Flashcards

Flashcard Deck Information

Class:ACC 131.00 - Financial Accounting
Subject:Accounting
University:Illinois State University
Term:Spring 2010
- of -
INCORRECT CORRECT
- INCORRECT     - CORRECT     - SKIPPED
Shuffle Remaining Cards Show Definitions First Take Quiz (NEW)
Hide Keyboard shortcuts
Next card
Previous card
Mark correct
Mark incorrect
Flip card
Start Over
Shuffle
      Mode:   CARDS LIST       ? pages   PRINT EXIT
Cost of goods available for sale Beginning inventory + purchase
Cost of goods sold Cost of goods available for sale - ending inventory
Purchases merchandise on credit Debit: Merch. Inventory Credit: Acc. Payable
Returned part of merchandise Debit: Acc Payable Credit: Merch Inventory
Generated by Koofers.com
Paid amount in full for purchase of transaction Debit: Acc. Payable Credit: Cash
Purchased merchandise on credit Paid before due date Debit: Acc. Payable Credit: Cash and Merchandise Inventory
Sold Merchandise on Credit Cost of merchandise Debit: Acc. Receivable Credit: Sales Revenue Debit: COGS Credit: Merch. Inventory
Accepted Returns on part of merchandise Debit: Sales returns and allowances Credit: Acc. Receivable Debit: Merch. Inventory Credit: COGS
Generated by Koofers.com
Collected payment for sale with discount Debit: Cash Debit: Sales discount Credit: Acc. Receivable
Collected payment for sale Debit: Cash Credit: Acc. Receivable
Perpetual Inventory System Balances for inventory and cost of goods sold are continually updated with each sale or purchase of inventory. Detailed records records both revenue and cost of sales
Periodic Inventory System No detailed records Records purchases as the occur
Generated by Koofers.com
2/10, N/30 2 percent discount if paid within 10 days payment due in 30 days
F.O.B. Shipping Buyer normally pays cost of transportation
F.O.B. Destination Ownership passes when the goods are delivered Seller is normally responsible for paying transportation cost
FIFO First in first out Oldest purchases are assumed to be first sold and more recent purchases are in ending inventory During rising prices companies report lower amounts for inventory cost and higher amounts for COGS
Generated by Koofers.com
LIFO Last in first out most recent purchases are allocated to the cost of goods sold and the earlies purchases are allocated to inventory During falling prices companies report higher amounts of inventory cost and lower COGS
Average Cost cost of goods available for sale / units available for sale
FIFO Ending Inventory Balance Inventory balance - COGS
FIFO&LIFO Journal Entries Recording Sales Debit: Cash Credit: Sales Rev Debit: CGS Credit: Merch Inventory
Generated by Koofers.com
FIFO Recording Purchases Debit: Cash Credit: Merch Inventory
LIFO Recording Purchases Debit: Merch Inventory Credit: Cash
COGS Model Beginning Inventory + Purchases = Cost of goods available for sale - Ending Inventory =COGS
Depreciable Cost Calculated as the cost of the asset its residual value This amount depreciated over the assets useful life
Generated by Koofers.com
Residual Value The amount of cash or trade-in consideration that the company expects to receive when an asset is retired from service
Book Value The value of an asset or liability as it appears on the balance sheet. Calculated as the cost of the asset or liability minus the balance in its related contra asset account
Intangible Asset Assets that provide a benefit to a company over a number of years, but lack physical substance. Exa: patents, copyrights, trademarks, and goodwill
Depreciation The process whereby companies systematically allocate the cost of their intangible operating assets (other than land) as an expense in each period in which asset is used.
Generated by Koofers.com
Depletion The process of allocating the cost of a natural resource to each period in which the resource is removed from the earth
Amortization The process by whereby companies systematically allocate the cost of their intangible operating assets as an expense among the accounting periods in which the asset is used and benefits are received.
Straight Line Depreciation Cost- Residual Value / Expected useful life
Double Declining Balance 1 / Useful life x 2
Generated by Koofers.com
Record the cost of a fixed asset Debit: Building Cost Debit: Misc. Expense Credit: Notes Payable
Record Depreciation Expense Debit: Deprec. Expense Credit: Accum. Depreciation
Record the disposal of the Expense Debit: Cash Debit: Acum Depreciation Credit: Machine Credit: Gain
Fixed Asset Turnover Ratio Net Sales / Avg. Fixed assets
Generated by Koofers.com
Avg. Age Acum depreciation / depreciation expense
Current Liability Obligations expected to be retired with existing current assets or creation of new current liabilities, 1 year or less
Long term Liabilities everything else over 1 year
Accrued Payables recognized by adjusting entries
Generated by Koofers.com
Contingent Liability Results when there is uncertainty about a possible loss
Warranty usually guarantees the repair or replacement of defective goods
Current Ratio Current assets / current liabilities
Quick Ratio (Cash + Marketable Securities + Acc. Receivable) / Current Liabilities
Generated by Koofers.com
Cash Ratio (Cash + Marketable Securities) / Current Liabilities
Operating Cash Flow Ratio Cash flows from operating activities / Current Liabilities
Buy Supplies on account receive merchandise on 5/15 Pay supplier on 6/15 5/15 Debit: Inventory Credit: Acc. Payable 6/15 Debit: Acc. Payable Credit: Cash
Recording a Note Borrow 600,000 on 3/11 6 months 8% interest 3/1 Debit: Cash Credit: Notes Payable 8/31 Debit: Notes Payable Debit: Interest Expense Credit: Cash
Generated by Koofers.com
Record accrued payables Pays 100,000 every other friday 12/31 falls on a tuesday 12/20 Debit: Wages Expense Credit: Cash 12/31 Debit: Wages Expense Credit: Wages Payable 1/3 Debit: Wages expense Debit: Wages payable Credit: Cash
Record Liabilities for sales tax for quarter Debit: Acc. Recievable Credit: Sales Rev Credit: Ill Sales tax pay Credit: Federal Tax pay
Record Taxes for Tax due date Debit: Ill sales tax pay Debit: Federal tax pay Credit: Cash
Journalize Warranty expense for the year Debit: Warranty expense Credit: Estimated warranty liability # x (1 failure/#sold) x (service cost/1 failure)
Generated by Koofers.com
Journalize payment for warranty Debit: Estimated warranty liability Credit: Cash Credit: Inventory
Bond A type of note which requires the issuing entity to pay the face value of the bond to the holder when it matures and usually to pay interest periodically at a specific rate
Face Value par value or principle
Secured Bond Has some collateral pledged against the corporation ability to pay
Generated by Koofers.com
Debenture Bonds Unsecured bonds, there is not collateral. The lender is relying on the general credit of the corporation a. If the borrower goes bankrupt then secured bond holders will get their collateral before the unsecured bondholders
Junk Bonds Where the risk of the borrower falling to make a payment is very high
Callable Bonds Give the right to pay off or call the bonds prior to their due date
Convertible Bonds Allow the bondholder to covert the bond into another security, normally a common stock
Generated by Koofers.com
Market Rate The market rate of interest demanded by creditors
Coupon Rate, Contract Rate, Stated rate of interest The rate of interest paid on the face value
Premium Yield < stated rate Interest expense < interest paid
Par All is equal
Generated by Koofers.com
Discount Yield > Stated rate Interest expense > interest paid
Debt to equity total liabilities/total equity
Debt to total assets total liabilities/ total assets
Long-term debt to equity long term debt/ total equity
Generated by Koofers.com
Authorized Stock The maximum number of shares the business may issue in each class of stock
Issued Stock The number of shares actually sold to stockholders
Outstanding Stock The number of issued shares actually in the hands of the stockholders
Treasury Stock When a corporation purchases its own previously issued stock
Generated by Koofers.com
Par Value The monetary amount printed on each share of stock that establishes a minimum price for the stock, but doesn’t determine the market value
Stated Value The amount of capital under law cannot be returned to the corporation owners unless the corporation is liquidated
Preferred Stock a. Pays large dividend b. Less risky compared to common stock c. Receive priority over common stockholders
Common Stock a. Voting in the election of the board of directors b. Sharing in profits and dividends of the company c. Keeping the same percentage of ownership if new stock is issued d. Sharing in the assets of liquidation in preparation of their holdings. Residual claim because common stockholders are only paid after creditors and preferred stockholders are paid
Generated by Koofers.com
Paid in capital in excess of par the amount received in excess of par value is recorded in shown first in accounts in the stockholders equity section
Balance in retained earnings Accumulated earnings that haven't been distributed to stockholders
Record Insurance at Par Debit: Cash Credit: Bonds Payable
Record Insurance at premium Debit: Cash Credit: Bonds pay Credit: Premium on bonds
Generated by Koofers.com
Record Insurance on discount Debit: Cash Debit: Discount on bonds Credit: Bonds payable
Record interest expense on bonds sold at par Debit: Interest expense Credit: Cash
Record repayment of loan Debit: Bonds payable Credit: Cash
Record issuance of bonds on zero coupon bonds Debit: Cash Debit: Discounts on bonds payable Credit: Bonds payable
Generated by Koofers.com
Record interest expense on zero coupon bonds Debit: Interest expense Credit: Discount on bonds payable
Record repayment of loan on zero coupon bonds Debit: Bonds payable Credit: Cash
Annual Preferred divided per share par x percent dividend
Annual total preferred dividend preferred dividend per share x # of shares
Generated by Koofers.com
Preferred dividend per share Preferred dividend paid/ # of preferred shares
Generated by Koofers.com

List View: Terms & Definitions

  Hide All 89 Print
 
Front
Back
 Cost of goods available for saleBeginning inventory + purchase
 Cost of goods soldCost of goods available for sale - ending inventory
 Purchases merchandise on creditDebit: Merch. Inventory
Credit: Acc. Payable
 Returned part of merchandiseDebit: Acc Payable
Credit: Merch Inventory
 Paid amount in full for purchase of transactionDebit: Acc. Payable
Credit: Cash
 Purchased merchandise on credit Paid before due dateDebit: Acc. Payable
Credit: Cash and Merchandise Inventory
 Sold Merchandise on Credit Cost of merchandise Debit: Acc. Receivable
Credit: Sales Revenue

Debit: COGS
Credit: Merch. Inventory
 Accepted Returns on part of merchandiseDebit: Sales returns and allowances
Credit: Acc. Receivable

Debit: Merch. Inventory
Credit: COGS
 Collected payment for sale with discount Debit: Cash
Debit: Sales discount
Credit: Acc. Receivable
 Collected payment for saleDebit: Cash
Credit: Acc. Receivable
 Perpetual Inventory SystemBalances for inventory and cost of goods sold are continually updated with each sale or purchase of inventory.
Detailed records
records both revenue and cost of sales
 Periodic Inventory SystemNo detailed records
Records purchases as the occur
 2/10, N/302 percent discount if paid within 10 days
payment due in 30 days
 F.O.B. ShippingBuyer normally pays cost of transportation
 F.O.B. DestinationOwnership passes when the goods are delivered
Seller is normally responsible for paying transportation cost
 FIFOFirst in first out
Oldest purchases are assumed to be first sold and more recent purchases are in ending inventory

During rising prices companies report lower amounts for inventory cost and higher amounts for COGS
 LIFOLast in first out
most recent purchases are allocated to the cost of goods sold and the earlies purchases are allocated to inventory

During falling prices companies report higher amounts of inventory cost and lower COGS
 Average Costcost of goods available for sale / units available for sale
 FIFO Ending Inventory BalanceInventory balance - COGS
 FIFO&LIFO Journal Entries Recording SalesDebit: Cash
Credit: Sales Rev

Debit: CGS
Credit: Merch Inventory
 FIFO Recording PurchasesDebit: Cash
Credit: Merch Inventory
 LIFO Recording PurchasesDebit: Merch Inventory
Credit: Cash
 COGS ModelBeginning Inventory
+ Purchases
= Cost of goods available for sale
- Ending Inventory
=COGS
 Depreciable CostCalculated as the cost of the asset its residual value
This amount depreciated over the assets useful life
 Residual ValueThe amount of cash or trade-in consideration that the company expects to receive when an asset is retired from service
 Book ValueThe value of an asset or liability as it appears on the balance sheet. Calculated as the cost of the asset or liability minus the balance in its related contra asset account
 Intangible AssetAssets that provide a benefit to a company over a number of years, but lack physical substance. Exa: patents, copyrights, trademarks, and goodwill
 DepreciationThe process whereby companies systematically allocate the cost of their intangible operating assets (other than land) as an expense in each period in which asset is used.
 DepletionThe process of allocating the cost of a natural resource to each period in which the resource is removed from the earth
 AmortizationThe process by whereby companies systematically allocate the cost of their intangible operating assets as an expense among the accounting periods in which the asset is used and benefits are received.
 Straight Line DepreciationCost- Residual Value / Expected useful life
 Double Declining Balance1 / Useful life x 2
 Record the cost of a fixed assetDebit: Building Cost
Debit: Misc. Expense
Credit: Notes Payable
 Record Depreciation ExpenseDebit: Deprec. Expense
Credit: Accum. Depreciation
 Record the disposal of the ExpenseDebit: Cash
Debit: Acum Depreciation
Credit: Machine
Credit: Gain
 Fixed Asset Turnover RatioNet Sales / Avg. Fixed assets
 Avg. AgeAcum depreciation / depreciation expense
 Current Liability Obligations expected to be retired with existing current assets or creation of new current liabilities, 1 year or less
 Long term Liabilitieseverything else over 1 year
 Accrued Payablesrecognized by adjusting entries
 Contingent Liability Results when there is uncertainty about a possible loss
 Warrantyusually guarantees the repair or replacement of defective goods
 Current RatioCurrent assets / current liabilities
 Quick Ratio(Cash + Marketable Securities + Acc. Receivable) / Current Liabilities
 Cash Ratio(Cash + Marketable Securities) / Current Liabilities
 Operating Cash Flow RatioCash flows from operating activities / Current Liabilities
 Buy Supplies on account receive merchandise on 5/15 Pay supplier on 6/155/15
Debit: Inventory
Credit: Acc. Payable
6/15
Debit: Acc. Payable
Credit: Cash
 Recording a Note Borrow 600,000 on 3/11 6 months 8% interest3/1
Debit: Cash
Credit: Notes Payable
8/31
Debit: Notes Payable
Debit: Interest Expense
Credit: Cash
 Record accrued payables Pays 100,000 every other friday 12/31 falls on a tuesday12/20
Debit: Wages Expense
Credit: Cash
12/31
Debit: Wages Expense
Credit: Wages Payable
1/3
Debit: Wages expense
Debit: Wages payable
Credit: Cash
 Record Liabilities for sales tax for quarter Debit: Acc. Recievable
Credit: Sales Rev
Credit: Ill Sales tax pay
Credit: Federal Tax pay
 Record Taxes for Tax due dateDebit: Ill sales tax pay
Debit: Federal tax pay
Credit: Cash
 Journalize Warranty expense for the year Debit: Warranty expense
Credit: Estimated warranty liability

# x (1 failure/#sold) x (service cost/1 failure)
 Journalize payment for warranty Debit: Estimated warranty liability
Credit: Cash
Credit: Inventory
 BondA type of note which requires the issuing entity to pay the face value of the bond to the holder when it matures and usually to pay interest periodically at a specific rate
 Face Valuepar value or principle
 Secured BondHas some collateral pledged against the corporation ability to pay
 Debenture BondsUnsecured bonds, there is not collateral. The lender is relying on the general credit of the corporation

a. If the borrower goes bankrupt then secured bond holders will get their collateral before the unsecured bondholders
 Junk BondsWhere the risk of the borrower falling to make a payment is very high
 Callable BondsGive the right to pay off or call the bonds prior to their due date
 Convertible BondsAllow the bondholder to covert the bond into another security, normally a common stock
 Market RateThe market rate of interest demanded by creditors
 Coupon Rate, Contract Rate, Stated rate of interestThe rate of interest paid on the face value
 Premium Yield < stated rate
Interest expense < interest paid
 ParAll is equal
 DiscountYield > Stated rate
Interest expense > interest paid
 Debt to equitytotal liabilities/total equity
 Debt to total assetstotal liabilities/ total assets
 Long-term debt to equitylong term debt/ total equity
 Authorized StockThe maximum number of shares the business may issue in each class of stock
 Issued StockThe number of shares actually sold to stockholders
 Outstanding StockThe number of issued shares actually in the hands of the stockholders
 Treasury StockWhen a corporation purchases its own previously issued stock
 Par ValueThe monetary amount printed on each share of stock that establishes a minimum price for the stock, but doesn’t determine the market value
 Stated ValueThe amount of capital under law cannot be returned to the corporation owners unless the corporation is liquidated
 Preferred Stocka. Pays large dividend
b. Less risky compared to common stock
c. Receive priority over common stockholders
 Common Stocka. Voting in the election of the board of directors
b. Sharing in profits and dividends of the company
c. Keeping the same percentage of ownership if new stock is issued
d. Sharing in the assets of liquidation in preparation of their holdings. Residual claim because common stockholders are only paid after creditors and preferred stockholders are paid
 Paid in capital in excess of parthe amount received in excess of par value is recorded in
shown first in accounts in the stockholders equity section
 Balance in retained earningsAccumulated earnings that haven't been distributed to stockholders
 Record Insurance at ParDebit: Cash
Credit: Bonds Payable
 Record Insurance at premiumDebit: Cash
Credit: Bonds pay
Credit: Premium on bonds
 Record Insurance on discountDebit: Cash
Debit: Discount on bonds
Credit: Bonds payable
 Record interest expense on bonds sold at parDebit: Interest expense
Credit: Cash

 Record repayment of loanDebit: Bonds payable
Credit: Cash
 Record issuance of bonds on zero coupon bondsDebit: Cash
Debit: Discounts on bonds payable
Credit: Bonds payable
 Record interest expense on zero coupon bondsDebit: Interest expense
Credit: Discount on bonds payable
 Record repayment of loan on zero coupon bondsDebit: Bonds payable
Credit: Cash
 Annual Preferred divided per sharepar x percent dividend
 Annual total preferred dividendpreferred dividend per share x # of shares
 Preferred dividend per sharePreferred dividend paid/ # of preferred shares
36, "/var/app/current/tmp/"