Questions and Answers
What is the transmission of goods and/or services to customers usually referred to as?
What is usually the second line in the income statement and is subtracted from Net Sales?
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?
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What is the contra asset that reduces Accounts Receivable?
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What is the term for a current asset that is meant for selling?
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What is a current liability that represents amounts received from customers for goods or services that haven't yet been provided?
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List the first step in the Revenue Recognition Steps.
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What is an examination of someone's credit history done by an agency?
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What method recognizes bad debt expense when specific customer accounts are identified as uncollectible?
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What is the most accurate method for estimating uncollectible accounts receivable?
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What is a payment mechanism that facilitates commerce between buyers and sellers?
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What is the maximum dollar amount a company allows customers to buy on credit?
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What term describes events in which customers return merchandise for a refund?
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Reductions in the amount a seller charges because of customer dissatisfaction are known as what?
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What is a promise by the seller regarding product quality called?
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What type of warranty provides a service beyond fixing defects?
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What is a request for repair or replacement of products due to defects called?
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What communicates that a seller has fulfilled their obligation at the time of sale?
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What are incentives provided by enterprises to encourage customer loyalty?
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What is the specialized version of the Procurement business process for labor?
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What event calculates the amounts an enterprise must pay to employees?
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What event represents employees performing scheduled work?
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What is the total amount employees earned called?
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What are amounts deducted from gross pay called?
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What document communicates an employee's gross pay, deductions, and deposit accounts?
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What are items provided by an employer in addition to gross pay called?
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What is an intangible asset resulting from acquiring another enterprise for more than its fair market value?
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What is the total wealth of an enterprise, calculated as Total Assets minus Total Liabilities?
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What is the amount of a paycheck calculated as gross pay minus payroll deductions?
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What is an individual or enterprise that buys a corporation's bonds called?
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What describes an enterprise that creates and sells bond certificates as a means of borrowing?
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What is the date when a bond's face amount must be repaid along with any unpaid interest?
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What is the interest rate printed on a bond certificate called?
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What is the collective name for all trades and issues of debt securities?
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What is the rate at which new debt can be issued called?
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What is the formal bond agreement that specifies the terms of repayment?
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What is the length of time that a bond issuer has use of bondholders' cash?
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What describes how often interest must be paid to bondholders?
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What amount must the bond issuer pay the bondholder at the end of the bond's term?
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What is the subset of the bond market with newly issued debt securities?
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What is the subset of the bond market where existing debt is traded?
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What is the face value of a bond minus the selling price when it sells for less?
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What is the selling price of a bond minus its face value when it sells for more?
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The date on which the company announces that it will pay a dividend is called the ______.
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What date determines who will receive declared dividends?
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What is the date on which cash is paid by the corporation to stockholders as a dividend?
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What describes the extent to which cash inflows exceed cash outflows in a company?
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What is cash that comes from financing activities called?
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What is a financial agreement specifying the principal amount and repayment terms called?
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What are periodic payments consisting of principal and interest called?
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What type of loan is made by a non-bank enterprise to another enterprise?
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What is the addition of accrued interest to the principal called?
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What is the first time a corporation issues stock to the public called?
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What is the total number of shares a corporation is authorized to sell called?
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What is the total number of shares sold to stockholders referred to as?
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What is the total number of shares of issued stock still owned by stockholders called?
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What refers to the total number of shares that have been repurchased and are held by the corporation?
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What is the common type of security that includes voting rights?
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What type of security represents ownership, usually has no voting rights, but has preferential treatment regarding dividends?
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What represents an arbitrary amount per share of stock set as legal capital?
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What is the monetary amount for which stock is sold in excess of the stock's par value called?
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What describes a corporation whose shares are not available to the general public?
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What is the capital provided by owners of private corporations called?
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What is a corporation whose shares are publicly available and traded on stock exchanges?
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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.