Classification of Balance Sheet Accounts Flashcards
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Questions and Answers

What is the definition of Preferred Stock?

  • Intangible assets
  • Current liabilities
  • Property, plant, and equipment
  • Capital stock (correct)

    • What is the definition of Goodwill?

  • Current liabilities
  • Current assets
  • Intangible assets (correct)
  • Capital stock

    • What does Salaries and Wages Payable refer to?

  • Noncurrent liabilities
  • Intangible assets
  • Investments
  • Current liabilities (correct)

    • What is the definition of Accounts Payable?

    <p>Current liabilities</p> Signup and view all the answers

    What is the definition of Buildings?

    <p>Property, plant, and equipment</p> Signup and view all the answers

    What is the definition of Equity Investments (to be sold within one year)?

    <p>Current assets</p> Signup and view all the answers

    What does Current Maturity of Long-term Debt refer to?

    <p>Current liabilities</p> Signup and view all the answers

    What is the definition of Premium on Bonds Payable?

    <p>Noncurrent liabilities</p> Signup and view all the answers

    What does Allowance for Doubtful Accounts represent?

    <p>Current assets</p> Signup and view all the answers

    What is the definition of Accounts Receivable?

    <p>Current assets</p> Signup and view all the answers

    What is the definition of Cash Surrender Value of Life Insurance?

    <p>Investments</p> Signup and view all the answers

    What is the definition of Notes Payable (due next year)?

    <p>Current liabilities</p> Signup and view all the answers

    What does Supplies refer to?

    <p>Current assets</p> Signup and view all the answers

    What is the definition of Common Stock?

    <p>Capital stock</p> Signup and view all the answers

    What is the definition of Land?

    <p>Property, plant, and equipment</p> Signup and view all the answers

    What is the definition of Bond Sinking Fund?

    <p>Investments</p> Signup and view all the answers

    What does Inventory refer to?

    <p>Current assets</p> Signup and view all the answers

    What is the definition of Prepaid Insurance?

    <p>Current assets</p> Signup and view all the answers

    What is the definition of Bonds Payable?

    <p>Noncurrent liabilities</p> Signup and view all the answers

    What is the definition of Income Taxes Payable?

    <p>Current liabilities</p> Signup and view all the answers

    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.

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