Chapter 2 - Completion

Refer to Balance Sheet Equation. JCP Company purchased marketable securities for $5,000 during the year, at the end of the year the company revalues the securities to $5,700. This revaluation would result in an increase to non-cash assets and

accumulated other comprehensive income

Net income equals revenues plus _______________________ minus expenses and _________________________.

gains, losses

Refer to Balance Sheet Equation. The payment of a note payable by a firm reduces cash and ______________________________.

liabilities

Revenues and expenses that firms include in both net income to shareholders and in taxable income, but in different periods are referred to as _______________________________

temporary differences

Refer to the Balance Sheet Equation. To recognize the cost of goods sold ORP Corporation will reduce retained earnings and reduce

non cash assets

The amount initially paid to acquire an asset is called _______________________

Acquisition cost

__________________________ assets and liabilities represent amounts of cash a firm can expect to receive or pay in the future.

Monetary

_____________________________ is the net amount that a firm would receive if it sold an asset or the net amount it would have to pay to settle a liability

Net realizable value

Items, such as interest revenue on municipal bond holdings, that do NOT affect taxable income or income taxes paid in any year are referred to as:

Permanent differences

Refer to the Balance Sheet Equation. If ORP Corporation sells $25,000 of its product on account, it will see an increase in non-cash assets and

Retained earnings

Firms recognize the reduction in service potential of assets such as patents and trademarks using the process of _______________________

amortization

The application of GAAP requires firms to write down assets whose fair values decrease below their book values, but does not allow firms to revalue upward the values of assets whose fair values have increased. This asymmetric treatment rests on the _______________________________________

conservatism convention

Refer to Balance Sheet Equation. ORP Corporation Purchases land $9,000 cash and 1000 shares of common stock values at 10 per share. This transaction results in ORP recording an decrease in cash of $9,000, an increase in non-cash assets of $ 19,000 and a increase in ______________________________ of $ $10,000

contributed capital

Stockholders' equity can be expanded into the following three accounts. Accumulated other comprehensive income, retained earnings and

contributed capital

The amount that a company would have to pay today to acquire an asset it now holds is called

current replacement cost

The difference between income tax payable and income tax expense is reported on the balance sheet as either _______________ or ___________________

deferred tax asset, deferred tax liability

Acquisition costs includes all costs necessary to get an asset ready for its:

intended use

A change in the ________________________ or ______________________ will NOT change a preset series of cash flows, however it will change the present value of those cash flows.

interest rate or discount rate