Accounting Final
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.