Intermediate Accounting 1 Final Exam
2/10, n/30 - ANS-meaning 2% discount if paid within 10 days, otherwise full payment within 30
days
\3 categories of adjusting entires - ANS-prepayments, accruals, estimates
\accounting constitution - ANS-provides underlying foundation for accounting standards, guide
the selection of events to be accounted for, measurement of those events, means of
summarizing and communicating them to interested parties
\accounts receivable - ANS-informal credit arrangements for goods and services sold, normally
due 30-60 days
\accrual basis accounting - ANS-measurement of revenues and expenses, regardless of when
cash is received or paid, difference is net income or net loss, ex unearned revenue
\accruals - ANS-services/goods we have not given cash for, accrued liabilities, accrued
receivables
\additions - ANS-adding a new major component to an existing asset
\adjusting entries - ANS-never involve cash and always involve 1 income statement account and
1 balance sheet account
\allowance - ANS-special price reduction may be given as an incentive for the customer to keep
the merchandise rather than returning it
\allowance method - ANS-estimates the amount of bad debt expense for the period and records
this in an adjusting entry
\alternative approach - ANS-recording prepayments directly into an expense/revenue the
adjusting them at the end of the period to the prepaid account
\asset is impaired if - ANS-book value > sum of discounted future net cash flows
\bad debt expense - ANS-inherent cost of granting credit, operation expense incurred to make
sales
\balance sheet - ANS-reports a company's financial position at a point in time, organized array
of assets, liabilities, and shareholders equity - grouped in common characteristics
\balance sheet approach - ANS-determines bad debt expense by estimating the net realizable
value of accounts receivable, by taking a % if AR
\beginning inventory + net purchases= - ANS-cost of goods available for sale
\book value - ANS-cost - accumulated depreciation
\capital markets - ANS-as a composite of all investors and creditors, helps our economy allocate
resources
\cash - ANS-amounts readily available to pay off debt or to use in operations
\cash basis accounting - ANS-measurement of cash receipts and cash payments from
transactions related to providing goods and services, difference is net operating cash flow, only
accounts for the cash flow/inflow when it is happens
\cash discounts - ANS-reduction in the amount to be paid by a credit customer if paid within a
specified period of time, intended to provide incentive for quick payment
, \cash equivalents - ANS-short-term, highly liquid investments, readily convertible to cash with
little risk of loss, have a maturity date no longer than 3 months from the date of purchase
\change in accounting estimate - ANS-changes due to revision of an estimate because of new
information or new experience, accounted for prospectively, new estimate is incorporated in any
related accounting determinations from that point on
\change in accounting principle - ANS-refers to a change from one acceptable accounting
method to another, accounted retrospectively by revising prior years' financial statements
\change in depreciation method - ANS-(BV - new salvage value)/ remaining useful life
\change in depreciation, amortization, or depletion method - ANS-accounted for prospectively,
most changes in estimate do not require a company to justify the change
\change in estimated useful life or salvage value - ANS-handle prospectively, does not restate
prior periods financial statements or make any adjustment, the chnage is only reflected in the
current/future periods
\closing entries - ANS-1. revenue accounts
2. expenses
3. income summary --> retained earnings
4. dividends --> retained earnings
\COGS= - ANS-beginning inventory
+net purchases
=COGAS
-ending inventory
\comparability - ANS-helps users see similarities and difference between events and conditions
\compensating balance - ANS-minimum cash balance that must be maintained in a company
bank account as support for borrowed funds
\comprehensive income - ANS-is the total change in equity for a reporting period other than
from transaction with owners, includes net income as well as other gains and losses that
change shareholder;s equity but are not included in traditional net income
\conceptual framework - ANS-"accounting constitution"
\consignor - ANS-transferor, retains legal title
\consistency - ANS-refers to the same accounting practices being used over time to permit valid
comparisons between reporting periods
\correction of accounting errors - ANS-caused by a transaction being recorded incorrectly or not
recorded at all
\cost effectiveness - ANS-providing information must outweigh the cost
\cost of buildings - ANS-purchase price, realtor commissions and legal fees, reconditioning
costs
\cost of equipment - ANS-purchase price, any sales tax, transportation costs, expenditures for
installation and testing, legal fees to establish title, any other costs to bring the asset to
condition and location for use
\cost of goods available for sale - ending inventory= - ANS-cost of goods sold
\cost of intangible assets - ANS-purchase price and all other costs necessary to bring the asset
to its desired condition and location for use
\cost of land - ANS-purchase price, attorney fees, real estate agent commissions, costs related
to title and title search, recording fees, any back taxes, liens, mortgages, or other obligations,
2/10, n/30 - ANS-meaning 2% discount if paid within 10 days, otherwise full payment within 30
days
\3 categories of adjusting entires - ANS-prepayments, accruals, estimates
\accounting constitution - ANS-provides underlying foundation for accounting standards, guide
the selection of events to be accounted for, measurement of those events, means of
summarizing and communicating them to interested parties
\accounts receivable - ANS-informal credit arrangements for goods and services sold, normally
due 30-60 days
\accrual basis accounting - ANS-measurement of revenues and expenses, regardless of when
cash is received or paid, difference is net income or net loss, ex unearned revenue
\accruals - ANS-services/goods we have not given cash for, accrued liabilities, accrued
receivables
\additions - ANS-adding a new major component to an existing asset
\adjusting entries - ANS-never involve cash and always involve 1 income statement account and
1 balance sheet account
\allowance - ANS-special price reduction may be given as an incentive for the customer to keep
the merchandise rather than returning it
\allowance method - ANS-estimates the amount of bad debt expense for the period and records
this in an adjusting entry
\alternative approach - ANS-recording prepayments directly into an expense/revenue the
adjusting them at the end of the period to the prepaid account
\asset is impaired if - ANS-book value > sum of discounted future net cash flows
\bad debt expense - ANS-inherent cost of granting credit, operation expense incurred to make
sales
\balance sheet - ANS-reports a company's financial position at a point in time, organized array
of assets, liabilities, and shareholders equity - grouped in common characteristics
\balance sheet approach - ANS-determines bad debt expense by estimating the net realizable
value of accounts receivable, by taking a % if AR
\beginning inventory + net purchases= - ANS-cost of goods available for sale
\book value - ANS-cost - accumulated depreciation
\capital markets - ANS-as a composite of all investors and creditors, helps our economy allocate
resources
\cash - ANS-amounts readily available to pay off debt or to use in operations
\cash basis accounting - ANS-measurement of cash receipts and cash payments from
transactions related to providing goods and services, difference is net operating cash flow, only
accounts for the cash flow/inflow when it is happens
\cash discounts - ANS-reduction in the amount to be paid by a credit customer if paid within a
specified period of time, intended to provide incentive for quick payment
, \cash equivalents - ANS-short-term, highly liquid investments, readily convertible to cash with
little risk of loss, have a maturity date no longer than 3 months from the date of purchase
\change in accounting estimate - ANS-changes due to revision of an estimate because of new
information or new experience, accounted for prospectively, new estimate is incorporated in any
related accounting determinations from that point on
\change in accounting principle - ANS-refers to a change from one acceptable accounting
method to another, accounted retrospectively by revising prior years' financial statements
\change in depreciation method - ANS-(BV - new salvage value)/ remaining useful life
\change in depreciation, amortization, or depletion method - ANS-accounted for prospectively,
most changes in estimate do not require a company to justify the change
\change in estimated useful life or salvage value - ANS-handle prospectively, does not restate
prior periods financial statements or make any adjustment, the chnage is only reflected in the
current/future periods
\closing entries - ANS-1. revenue accounts
2. expenses
3. income summary --> retained earnings
4. dividends --> retained earnings
\COGS= - ANS-beginning inventory
+net purchases
=COGAS
-ending inventory
\comparability - ANS-helps users see similarities and difference between events and conditions
\compensating balance - ANS-minimum cash balance that must be maintained in a company
bank account as support for borrowed funds
\comprehensive income - ANS-is the total change in equity for a reporting period other than
from transaction with owners, includes net income as well as other gains and losses that
change shareholder;s equity but are not included in traditional net income
\conceptual framework - ANS-"accounting constitution"
\consignor - ANS-transferor, retains legal title
\consistency - ANS-refers to the same accounting practices being used over time to permit valid
comparisons between reporting periods
\correction of accounting errors - ANS-caused by a transaction being recorded incorrectly or not
recorded at all
\cost effectiveness - ANS-providing information must outweigh the cost
\cost of buildings - ANS-purchase price, realtor commissions and legal fees, reconditioning
costs
\cost of equipment - ANS-purchase price, any sales tax, transportation costs, expenditures for
installation and testing, legal fees to establish title, any other costs to bring the asset to
condition and location for use
\cost of goods available for sale - ending inventory= - ANS-cost of goods sold
\cost of intangible assets - ANS-purchase price and all other costs necessary to bring the asset
to its desired condition and location for use
\cost of land - ANS-purchase price, attorney fees, real estate agent commissions, costs related
to title and title search, recording fees, any back taxes, liens, mortgages, or other obligations,
