PACE exam
1 main reason a company would repurchase stock - ANS-improve earnings per share
3 key pieces of information stated on bond certificate - ANS-interest rate
face value
maturity date
3 types of events are recorded as transactions - ANS-operating
financial
investing
4 characteristics of useful accounting information - ANS--comprable
-verifiable
-timely
-understandable
accounting equation - ANS-A=L+SE
accrual - ANS-cash later
accured expense - ANS-expense have been incurred but not paid
accured revenue - ANS-revenue that been earned but not collected
adjusting entries are made to... - ANS-retained revenue and expenses that have not been
recorded but belong in current period
adjusting entry affect which financial statements - ANS-balance
income
adjusting entry normally affects what type of account - ANS-balance sheet
at the beg of the year net income will equal what amount - ANS-retained earnings
basic elements of balance sheet - ANS-assests
liabilities
stockholder equity
business in which ownership is transferred by private sale of stock - ANS-corporations stock
business that has stock bought and sold on exchanges - ANS-owners of corporation
carrying EXCESSIVE quantities of inventory causes what problems - ANS-not enough storage,
obsolete
carrying INSUFFICIENT quantities of inventory causes what problems - ANS-not able to meet
customers needs
cash flows - ANS-Financing
Investing
Opertating
common stock equation - ANS-#issued*par
conservatism - ANS-result in lower net income
contingent liability - ANS-potential liabilites that arise as a result of past transactions or events,
but ultimately depends on future event
copyright - ANS-givees the owner the exclusive right to publish, use, and sell work
corporation - ANS-separate entityfrom legeal and accounting perspective
, credit - ANS-receive goods or service before paying
cumulative dividend preference - ANS-if all or part of the current dividends is not paid in full,
unpaid amount is DIVIDENDS IN ARREARS
cumulative vs non cumulative - ANS-preferred stock
current assests - ANS-assests the busniess will use up or turn into cash within 12 months
current dividend preference - ANS-requires preferred dividend to be paid before paying any
dividends to holders of common stock
current liability - ANS-debts and other obligations that will be paid or fulfilled within 12 months
days to collect - ANS-measure of the average number of days from the time a sale is made on
account to the time its collected
deferral - ANS-cash first
depreciated assests - ANS-long lived tangible assests
difference with note and account payable - ANS-note payable have interest
dividends - ANS-distribution of earnings
does dividends arrears show in balance sheet - ANS-no
earnings forecast - ANS-forward look on what is expected to earn
(change o monthly basis)
equation for net recevables - ANS-account reciveables-allowance for DA
expenses - ANS-all cost of doing business that are necessary to earn revenue
financing - ANS-borrowing from banks ; long term liability; stocks and bonds
for a MANUFACTURER when does inventory turnover occur - ANS-sell goods
for a MERCHANDISER when does inventory turnover occur - ANS-buy goods
franchise - ANS-contractual right to sell certain product or services, use certain trademarks or
perform activites in certain regions
GAAP - ANS-rules of accounting created by the financial accounting standards board for use in
the US
general journal - ANS-to record the effects of each days transactions
general ledger - ANS-summarizes effects of journal entries on each account
gross profit percentage - ANS-measures the percentage of profit earned on each dollar of sales
headings of financial statements contain - ANS-COMPANY NAME
TYPE OF STATEMENT
DATE
how are debits and credits displayed - ANS-DR on left and CR on right
how do dividends affect a companys financial statement - ANS-Retained Earnings
how do notes payable differ from accounts payable - ANS-notes payable is a longer term (2yr)
than accounts payable
how do performance based bonuses affect managers behavior - ANS-if they get bonus off of net
income they are going to make it the highest they can
how does accounting information serve a CONTRACTING function - ANS-clear information and
reliable and relevant
how does accounting information serve a GOVERNANCE function - ANS-allows regulators to
see financial functions
how does accounting information serve a MANAGEMENT function - ANS-allows management
to have access with financial information
1 main reason a company would repurchase stock - ANS-improve earnings per share
3 key pieces of information stated on bond certificate - ANS-interest rate
face value
maturity date
3 types of events are recorded as transactions - ANS-operating
financial
investing
4 characteristics of useful accounting information - ANS--comprable
-verifiable
-timely
-understandable
accounting equation - ANS-A=L+SE
accrual - ANS-cash later
accured expense - ANS-expense have been incurred but not paid
accured revenue - ANS-revenue that been earned but not collected
adjusting entries are made to... - ANS-retained revenue and expenses that have not been
recorded but belong in current period
adjusting entry affect which financial statements - ANS-balance
income
adjusting entry normally affects what type of account - ANS-balance sheet
at the beg of the year net income will equal what amount - ANS-retained earnings
basic elements of balance sheet - ANS-assests
liabilities
stockholder equity
business in which ownership is transferred by private sale of stock - ANS-corporations stock
business that has stock bought and sold on exchanges - ANS-owners of corporation
carrying EXCESSIVE quantities of inventory causes what problems - ANS-not enough storage,
obsolete
carrying INSUFFICIENT quantities of inventory causes what problems - ANS-not able to meet
customers needs
cash flows - ANS-Financing
Investing
Opertating
common stock equation - ANS-#issued*par
conservatism - ANS-result in lower net income
contingent liability - ANS-potential liabilites that arise as a result of past transactions or events,
but ultimately depends on future event
copyright - ANS-givees the owner the exclusive right to publish, use, and sell work
corporation - ANS-separate entityfrom legeal and accounting perspective
, credit - ANS-receive goods or service before paying
cumulative dividend preference - ANS-if all or part of the current dividends is not paid in full,
unpaid amount is DIVIDENDS IN ARREARS
cumulative vs non cumulative - ANS-preferred stock
current assests - ANS-assests the busniess will use up or turn into cash within 12 months
current dividend preference - ANS-requires preferred dividend to be paid before paying any
dividends to holders of common stock
current liability - ANS-debts and other obligations that will be paid or fulfilled within 12 months
days to collect - ANS-measure of the average number of days from the time a sale is made on
account to the time its collected
deferral - ANS-cash first
depreciated assests - ANS-long lived tangible assests
difference with note and account payable - ANS-note payable have interest
dividends - ANS-distribution of earnings
does dividends arrears show in balance sheet - ANS-no
earnings forecast - ANS-forward look on what is expected to earn
(change o monthly basis)
equation for net recevables - ANS-account reciveables-allowance for DA
expenses - ANS-all cost of doing business that are necessary to earn revenue
financing - ANS-borrowing from banks ; long term liability; stocks and bonds
for a MANUFACTURER when does inventory turnover occur - ANS-sell goods
for a MERCHANDISER when does inventory turnover occur - ANS-buy goods
franchise - ANS-contractual right to sell certain product or services, use certain trademarks or
perform activites in certain regions
GAAP - ANS-rules of accounting created by the financial accounting standards board for use in
the US
general journal - ANS-to record the effects of each days transactions
general ledger - ANS-summarizes effects of journal entries on each account
gross profit percentage - ANS-measures the percentage of profit earned on each dollar of sales
headings of financial statements contain - ANS-COMPANY NAME
TYPE OF STATEMENT
DATE
how are debits and credits displayed - ANS-DR on left and CR on right
how do dividends affect a companys financial statement - ANS-Retained Earnings
how do notes payable differ from accounts payable - ANS-notes payable is a longer term (2yr)
than accounts payable
how do performance based bonuses affect managers behavior - ANS-if they get bonus off of net
income they are going to make it the highest they can
how does accounting information serve a CONTRACTING function - ANS-clear information and
reliable and relevant
how does accounting information serve a GOVERNANCE function - ANS-allows regulators to
see financial functions
how does accounting information serve a MANAGEMENT function - ANS-allows management
to have access with financial information
