ACC 212 Pre Class Assignments ch. 5-7 Flashcards

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Questions and Answers

What is the transmission of goods and/or services to customers usually referred to as?

Cost of Sales

Accounts Receivable

Inventory

Revenues (correct)

What is usually the second line in the income statement and is subtracted from Net Sales?

Gross Profit

Bad Debt Expense

Revenues

Cost of Sales (correct)

What represents a cost of offering credit sales that results from customers not paying?

Bad Debt Expense

What is a current asset that represents amounts due from customers?

Accounts Receivable Signup and view all the answers

What is the contra asset that reduces Accounts Receivable?

Allowance for Uncollectible Accounts Signup and view all the answers

What is the term for a current asset that is meant for selling?

Inventory Signup and view all the answers

What is a current liability that represents amounts received from customers for goods or services that haven't yet been provided?

Deferred Revenue Signup and view all the answers

List the first step in the Revenue Recognition Steps.

Identify the contract with a customer Signup and view all the answers

What is an examination of someone's credit history done by an agency?

Credit Check Signup and view all the answers

What method recognizes bad debt expense when specific customer accounts are identified as uncollectible?

Direct Write-off Method Signup and view all the answers

What is the most accurate method for estimating uncollectible accounts receivable?

Aging of Accounts Receivable Analysis Signup and view all the answers

What is a payment mechanism that facilitates commerce between buyers and sellers?

Credit Card Signup and view all the answers

What is the maximum dollar amount a company allows customers to buy on credit?

Credit Limit Signup and view all the answers

What term describes events in which customers return merchandise for a refund?

Sales Returns Signup and view all the answers

Reductions in the amount a seller charges because of customer dissatisfaction are known as what?

Sales Allowances Signup and view all the answers

What is a promise by the seller regarding product quality called?

Assurance-Type Product Warranty Signup and view all the answers

What type of warranty provides a service beyond fixing defects?

Service-Type Product Warranty Signup and view all the answers

What is a request for repair or replacement of products due to defects called?

Product Warranty Claim Signup and view all the answers

What communicates that a seller has fulfilled their obligation at the time of sale?

Warranty Liability Signup and view all the answers

What are incentives provided by enterprises to encourage customer loyalty?

Customer Loyalty Programs Signup and view all the answers

What is the specialized version of the Procurement business process for labor?

Payroll Business Process Signup and view all the answers

What event calculates the amounts an enterprise must pay to employees?

Run Payroll Event Signup and view all the answers

What event represents employees performing scheduled work?

Receive Labor Event Signup and view all the answers

What is the total amount employees earned called?

Gross Pay Signup and view all the answers

What are amounts deducted from gross pay called?

Withholdings, also called Payroll Deductions Signup and view all the answers

What document communicates an employee's gross pay, deductions, and deposit accounts?

Direct Deposit Advice or Paystub Signup and view all the answers

What are items provided by an employer in addition to gross pay called?

Fringe Benefits Signup and view all the answers

What is an intangible asset resulting from acquiring another enterprise for more than its fair market value?

Goodwill Signup and view all the answers

What is the total wealth of an enterprise, calculated as Total Assets minus Total Liabilities?

Net Worth Signup and view all the answers

What is the amount of a paycheck calculated as gross pay minus payroll deductions?

Net Pay Signup and view all the answers

What is an individual or enterprise that buys a corporation's bonds called?

Bondholder Signup and view all the answers

What describes an enterprise that creates and sells bond certificates as a means of borrowing?

Bond Issuer Signup and view all the answers

What is the date when a bond's face amount must be repaid along with any unpaid interest?

Maturity Date Signup and view all the answers

What is the interest rate printed on a bond certificate called?

Stated Interest Rate Signup and view all the answers

What is the collective name for all trades and issues of debt securities?

Bond Market Signup and view all the answers

What is the rate at which new debt can be issued called?

Market Interest Rate Signup and view all the answers

What is the formal bond agreement that specifies the terms of repayment?

Bond Certificate Signup and view all the answers

What is the length of time that a bond issuer has use of bondholders' cash?

Term of the Bond Signup and view all the answers

What describes how often interest must be paid to bondholders?

Interest Payment Frequency Signup and view all the answers

What amount must the bond issuer pay the bondholder at the end of the bond's term?

Face Amount or Face Value Signup and view all the answers

What is the subset of the bond market with newly issued debt securities?

Primary Market Signup and view all the answers

What is the subset of the bond market where existing debt is traded?

Secondary Market Signup and view all the answers

What is the face value of a bond minus the selling price when it sells for less?

Bond Discount Signup and view all the answers

What is the selling price of a bond minus its face value when it sells for more?

Bond Premium Signup and view all the answers

The date on which the company announces that it will pay a dividend is called the ______.

Dividend declaration date Signup and view all the answers

What date determines who will receive declared dividends?

Dividend Date of Record Signup and view all the answers

What is the date on which cash is paid by the corporation to stockholders as a dividend?

Dividend Payment Date Signup and view all the answers

What describes the extent to which cash inflows exceed cash outflows in a company?

Internal Financing Signup and view all the answers

What is cash that comes from financing activities called?

External Financing Signup and view all the answers

What is a financial agreement specifying the principal amount and repayment terms called?

Promissory Note Signup and view all the answers

What are periodic payments consisting of principal and interest called?

Installment Payments Signup and view all the answers

What type of loan is made by a non-bank enterprise to another enterprise?

Commercial Paper Signup and view all the answers

What is the addition of accrued interest to the principal called?

Compounding of Interest Signup and view all the answers

What is the first time a corporation issues stock to the public called?

Initial Public Offering (IPO) Signup and view all the answers

What is the total number of shares a corporation is authorized to sell called?

Authorized Stock Signup and view all the answers

What is the total number of shares sold to stockholders referred to as?

Issued Stock Signup and view all the answers

What is the total number of shares of issued stock still owned by stockholders called?

Outstanding Stock Signup and view all the answers

What refers to the total number of shares that have been repurchased and are held by the corporation?

Treasury Stock Signup and view all the answers

What is the common type of security that includes voting rights?

Common Stock Signup and view all the answers

What type of security represents ownership, usually has no voting rights, but has preferential treatment regarding dividends?

Preferred Stock Signup and view all the answers

What represents an arbitrary amount per share of stock set as legal capital?

Par Value Signup and view all the answers

What is the monetary amount for which stock is sold in excess of the stock's par value called?

Additional Paid in Capital (APIC) Signup and view all the answers

What describes a corporation whose shares are not available to the general public?

Private Corporation Signup and view all the answers

What is the capital provided by owners of private corporations called?

Private Equity Signup and view all the answers

What is a corporation whose shares are publicly available and traded on stock exchanges?

Public Corporation Signup and view all the answers

Study Notes

Revenues and Expenses

Revenues represent the transmission of goods and services to customers, typically reflecting the largest value on financial statements.
Cost of Sales is deducted from Net Sales in the income statement, resulting in Gross Profit.
Bad Debt Expense accounts for credit sales that are not collected.

Current Assets and Liabilities

Accounts Receivable denotes amounts due from customers.
Allowance for Uncollectible Accounts is a contra asset that decreases Accounts Receivable.
Inventory represents goods owned to sell.
Deferred Revenue is payments received prior to providing the goods or services.

Revenue Recognition

Revenue Recognition Steps include identifying contracts and performance obligations, determining transaction prices, and recognizing revenue as obligations are satisfied.

Credit and Debts

Credit Check involves assessing a customer's credit history through reporting agencies.
Direct Write-off Method records bad debt once specific accounts are deemed uncollectible; while Aging of Accounts Receivable Analysis provides accurate estimations of uncollectible debts.

Warranties and Customer Relations

Assurance-Type Product Warranty guarantees product quality for a defined time, while Service-Type Warranty offers additional services.
Product Warranty Claim refers to customer repair or replacement requests.
Warranty Liability indicates obligations to repair or replace sold products.

Employee Compensation

Payroll Business Process focuses on procuring employee labor.
Gross Pay is the total earnings of employees, while Net Pay is Gross Pay minus deductions.
Withholdings represent deductions not paid to employees directly, instead forwarded to external parties.
Fringe Benefits include additional non-wage compensations paid by employers.

Investments and Securities

Goodwill is an intangible asset from acquiring businesses at a premium over fair market value.
Bondholders buy bonds issued by a corporation, which must repay the face amount at the maturity date along with interest.
The bond market encompasses all trading of debt securities, with the primary market for new bonds and the secondary market for existing bonds.
Bonds may sell at a discount or premium based on market conditions.

Corporate Finance

Dividend Declaration Date marks the legal obligation to pay dividends, while the Dividend Date of Record determines eligible stockholders.
Internal Financing refers to cash inflows exceeding outflows in business processes, contrasted with External Financing that comes from borrowing activities.
Promissory Notes outline loan agreements between lenders and borrowers, specifying amounts and repayment terms.

Stock and Ownership

Initial Public Offering (IPO) marks the corporation's first stock sale to the public.
Authorized Stock is the maximum number of shares a corporation can sell; Issued Stock represents sold shares, while Outstanding Stock refers to shares still held by shareholders.
Common Stock includes voting rights for shareowners, while Preferred Stock offers certain privileges but usually lacks voting rights.
Par Value is a legal capital amount assigned to stock, distinct from market value; Additional Paid in Capital is the excess over this par value.

Corporate Classification

Private Corporations are owned by a limited group and not publicly traded.
Public Corporations’ shares are traded publicly on exchanges like NYSE and NASDAQ, attracting a wider pool of investors.

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Enhance your understanding of key concepts from chapters 5, 6, and 7 of ACC 212 with these engaging flashcards. Test your knowledge on terms like revenues and cost of sales, crucial for mastering income statements and financial accounting principles.