Questions and Answers
What is the definition of Preferred Stock?
What is the definition of Goodwill?
What does Salaries and Wages Payable refer to?
What is the definition of Accounts Payable?
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What is the definition of Buildings?
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What is the definition of Equity Investments (to be sold within one year)?
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What does Current Maturity of Long-term Debt refer to?
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What is the definition of Premium on Bonds Payable?
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What does Allowance for Doubtful Accounts represent?
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What is the definition of Accounts Receivable?
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What is the definition of Cash Surrender Value of Life Insurance?
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What is the definition of Notes Payable (due next year)?
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What does Supplies refer to?
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What is the definition of Common Stock?
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What is the definition of Land?
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What is the definition of Bond Sinking Fund?
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What does Inventory refer to?
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What is the definition of Prepaid Insurance?
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What is the definition of Bonds Payable?
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What is the definition of Income Taxes Payable?
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Study Notes
Preferred Stock
- Represents ownership in a corporation with a higher claim on assets than common stock.
- Classified under capital stock on the balance sheet.
Goodwill
- An intangible asset that arises when a company acquires another for more than its fair market value.
- Reflects factors such as brand reputation and customer loyalty.
Salaries and Wages Payable
- Liabilities that a company owes to its employees for services rendered but not yet paid.
- Considered a current liability, typically due within a year.
Accounts Payable
- Amounts a company owes suppliers for products or services purchased on credit.
- Classified as a current liability, indicating short-term financial obligations.
Buildings
- Physical structures owned by a business used for operations.
- Classified under property, plant, and equipment on the balance sheet.
Equity Investments (to be sold within one year)
- Investments in shares of other companies expected to be liquidated in the short term.
- Listed as current assets due to the quick realization potential.
Current Maturity of Long-Term Debt
- Portion of long-term debt that is due within the next year.
- Considered a current liability, indicating an upcoming obligation.
Premium on Bonds Payable
- Represents the excess amount received over the face value of bonds issued.
- Classified as a noncurrent liability as it is associated with long-term debt obligations.
Allowance for Doubtful Accounts
- A contra asset account that reduces the total accounts receivable to reflect expected uncollectible amounts.
- Typically classified within current assets.
Accounts Receivable
- Money owed to a business by customers for goods or services rendered on credit.
- Represented as a current asset, reflecting expected cash inflow within a year.
Cash Surrender Value of Life Insurance
- The amount an insurance policyholder can receive if they cancel their life insurance policy before it matures.
- Classified under investments.
Notes Payable (due next year)
- Written promissory notes that a company must pay back within the next year.
- Categorized as current liabilities based on the repayment timeframe.
Supplies
- Consumables that a business uses in the course of providing its services.
- Considered current assets as they are expected to be consumed or used within a year.
Common Stock
- Equity security representing ownership in a corporation with voting rights.
- Classified as capital stock on the balance sheet.
Land
- Real property owned by a company that is utilized in its operations but is not depreciable.
- Listed under property, plant, and equipment due to its long-term nature.
Bond Sinking Fund
- Fund established by a company to accumulate money for the future repayment of bonds.
- Classified under investments, representing a long-term financial commitment.
Inventory
- Goods available for sale in the normal course of business.
- Classified as current assets as it is expected to be sold within one year.
Prepaid Insurance
- Insurance premiums paid in advance for coverage that will be utilized in the future.
- Considered a current asset because it holds value for expenses within the upcoming year.
Bonds Payable
- Long-term debt instruments that a company issues to raise funds.
- Classified as noncurrent liabilities representing commitments beyond one year.
Income Taxes Payable
- Amount owed by a business to tax authorities based on taxable income.
- Considered a current liability, typically due within the financial year.
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Description
Test your knowledge of balance sheet accounts with these flashcards. Each card presents a key term along with its corresponding definition, helping you to understand the classification of various assets, liabilities, and equity. Perfect for finance students and professionals alike.
