Accounting Final

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Commitment

A contractual promise to make transactions in the future that create financial obligations for a company is a

Connors Company paid​ $700 cash to make a repair on equipment it sold under a​ one-year warranty in the prior year. The entry to record the payment will debit

Accrued Warranty Payable and credit Cash.

Post-retirement benefits

Amounts owed for providing benefits to retirees such as health care costs.

Accrued employee compensation and benefits

Amounts owed to employees for salaries and other​ payroll-related expenses.

Accounts payable

Amounts owed to suppliers for products or services that have been purchased on account.

Other liabilities

A​ catch-all group of liabilities that do not fit one or more specific categories. This is usually listed among the​ long-term liabilities.

Leverage ratio

A​ company's average total assets per dollar of average​ stockholders' equity is its

Convertible

Corporate bonds that can be exchanged for shares of the​ corporation's common stock if certain conditions are met are called

Accrued Expenses

Expenses that the company has incurred but not yet​ paid; these are liabilities for expenses such as interest and income taxes.

What kind of account is Unearned​ Revenue?

Liability account

In a DuPont​ analysis, what are the components of return on​ assets?

Net Profit Margin Ratio and Asset Turnover Ratio

double taxation

One disadvantage that corporations face is

Long-term debt

The amount of​ long-term notes and bonds payable that the company expects to pay after the coming year.

paid-in capital

The amount of​ stockholders' equity that the stockholders have contributed to the corporation is called

par value

The arbitrary amount assigned to each share of stock when it is originally authorized is its

Charter

The authorization from the state to issue a certain number of shares of stock is granted through the​ corporation's

share of capital stock

The basic unit of ownership for a corporation is one

corporation

The business entity formed under state law that has a separate legal identity from its owners is a

Current portion of long-term debt

The next​ year's payments on the​ company's long-term debt.

stockholders

The owners of the corporation are called

preemption

The right to maintain​ one's proportionate ownership in the corporation is the right of

liquidation

The right to receive a proportionate share of any assets remaining after the corporation goes out of​ business, sells its​ assets, and pays off its liabilities is the right of

lessee

The tenant in a lease arrangement is also known as the

Adjusting Accounts, Credit

What type of account is Discount on Bonds​ Payable, and what is its normal​ balance?

Accounts payable

Which of the following items is most likely a​ short-term liability?

times-interest-earned ratio

a high ________ indicates ease in paying interest expense.

An​ end-of-period adjusting entry that debits Unearned Revenue most likely will credit

a revenue

The basic form of capital stock is

a share of common stock

Failure to accrue interest expense results in

an overstatement of net income and an understatement of liabilities.

Which of the following classifications represents the most shares of common​ stock?

authorized shares

real owners of a corporation

common stockholders

operating lease

covering twelve months or less is the only type of lease that is not required to be included on the balance sheet.

Notes payable due in six months are reported as

current liabilities on the balance sheet.

Finance lease

enables a company leasing an asset to own it after a period of time.

preferred stock

gives owners certain advantages such as the right to receive dividends and liquidations payments ahead of other shareholders, non-voting

Amortizing the discount on bonds payable

increases the recorded amount of interest expense.

Income tax payable

is a current liability and represents the amount of income taxes a company must pay to the federal government based on tax reporting rules.

preferred stock

is a hybrid form of capital stock resembling both equity and debt that pays a fixed dividend.

common stock

is the basic form of capital stock. the owners of the corporation who have basic right such as the right to vote

limited liability

is the legal concept that means stockholders can lose no more than the cost of their investment in the company.

Deferred income taxes payable

is usually a​ long-term liability arising from the temporary timing differences for revenues and expense recognition between GAAP accounting rules and the U.S. tax code.

Debt Raito

measures the proportion of a​ company's total liabilities to its total assets.

Tennis Shoe Warehouse operates in a state with a​ 6.5% sales tax. For​ convenience, Tennis Shoe Warehouse credits Sales Revenue for the total amount​ (selling price plus sales​ tax) collected from each customer. If Tennis Shoe Warehouse fails to make an adjustment for sales​ taxes,

net income will be overstated and liabilities will be understated.

Preferred stock is least likely to have which of the following​ characteristics?

preference as to voting

Stockholders are eligible for a dividend if they own the stock on the date of

record

retained earnings

represents the amount of​ stockholders' equity that the corporation has earned through profitable operations less any dividends declared.

When treasury stock is sold for less than its​ cost, the entry should include a debit to

retained earnings

The issuance of common stock in exchange for cash is reported​ in:

the financing activities section of the statement of cash flows.

A company declares a​ 5% stock dividend. The debit to Retained Earnings is an amount equal to

the market value of the shares to be issued.

For the purpose of classifying liabilities as current or​ noncurrent, the term operating cycle refers to

the time period between the purchase of merchandise and the conversion of this merchandise back to cash.


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