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Flashcards

Accounting 201 Exam

Faizan Ahmed English 81 cards

Cards in this deck (81)

  1. 1Accounting basis in which companies record, in the periods in which the events occur, transactions that change a company's financial statements, even if cash was not exchanged.Accrual-basis accounting
  2. 2Expenses incurred but not yet paid in cash or recorded.Accrued expenses
  3. 3Revenues for services performed but not yet received in cash or recordedAccrued revenues
  4. 4A list of accounts and their balances after all adjustments have been made.Adjusted trial balance
  5. 5Entries made at the end of an accounting period to ensure that the revenue recognition and expense recognition principles are followed.Adjusting entries
  6. 6The difference between the cost of a depreciable asset and its related accumulated depreciation.Book value
  7. 7Accounting basis in which a company records revenue only when it receives cash and an expense only when it pays cash.Cash-basis accounting
  8. 8Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders' equity account, Retained Earnings.Closing entries
  9. 9An account that is offset against an asset account on the balance sheet.Contra asset account
  10. 10The process of allocating the cost of an asset to expense over its useful life.Depreciation
  11. 11The planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income.Earnings Management
  12. 12The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues.Expense recognition principle (matching principle)
  13. 13An accounting period that is one year long.Fiscal year
  14. 14A temporary account used in closing revenue and expense accounts.Income Summary
  15. 15An assumption that the economic life of a business can be divided into artificial time periods.Periodicity assumption
  16. 16Balance sheet accounts whose balances are carried forward to the next accounting period.Permanent accounts
  17. 17A list of permanent accounts and their balances after a company has journalized and posted closing entries.Post-closing trial balance
  18. 18Expenses paid in cash before they are used or consumedPrepaid expenses (prepayments)
  19. 19Indicates the level of full and transparent information that a company provides to users of its financial statements.quality of earnings
  20. 20The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied.Revenue recognition principle
  21. 21An entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period.Reversing entry
  22. 22Revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period.Temporary accounts
  23. 23Cash received and a liability recorded before services are performed.Unearned revenues
  24. 24The length of service of a productive asset.Useful life
  25. 25A multiple-column form that companies may use in the adjustment process and in preparing financial statements.Worksheet
  26. 26An account that is offset against a revenue account on the income statement.Contra revenue account
  27. 27The total cost of merchandise sold during the period.Cost of goods sold
  28. 28The excess of net sales over the cost of goods sold.Gross profit
  29. 29Gross profit expressed as a percentage by dividing the amount of gross profit by net sales.Gross profit rate
  30. 30Sales less sales returns and allowances and sales discounts.Net sales
  31. 31An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period.Periodic inventory system
  32. 32A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand.Perpetual inventory system
  33. 33Measures the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales.Profit margin
  34. 34A deduction made to the selling price of merchandise, granted by the seller, so that the buyer will keep the merchandise.Purchase allowance
  35. 35A cash discount claimed by a buyer for prompt payment of a balance due.Purchase discount
  36. 36A document that provides support for each purchase.Purchase invoice
  37. 37A return of goods from the buyer to the seller for cash or credit.Purchase return
  38. 38A measure used to indicate the extent to which a company's earnings provide a full and transparent depiction of its performance; computed as net cash provided by operating activities divided by net income.Quality of earnings ratio
  39. 39A reduction given by a seller for prompt payment of a credit sale.Sales discount
  40. 40A document that provides support for each sale.Sales invoice
  41. 41Transactions in which the seller either accepts goods back from the purchaser (a return) or grants a reduction in the purchase price (an allowance) so that the buyer will keep the goods.Sales returns and allowances
  42. 42Primary source of revenue for a merchandising company.Sales revenue
  43. 43An inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold.Average-cost method
  44. 44Goods held for sale by one party although ownership of the goods is retained by another party.Consigned goods
  45. 45The cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities.Current replacement cost
  46. 46Measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover.Days in inventory
  47. 47Manufactured items that are completed and ready for sale.Finished goods inventory
  48. 48An inventory costing method that assumes that the earliest goods purchased are the first to be sold.First-in, first-out (FIFO) method
  49. 49Freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer.FOB destination
  50. 50Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.FOB shipping point
  51. 51A ratio that indicates the liquidity of inventory by measuring the number of times average inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period.Inventory turnover
  52. 52Inventory system in which companies manufacture or purchase goods just in time for use.Just-in-time (JIT) inventory
  53. 53An inventory costing method that assumes that the latest units purchased are the first to be sold.Last-in, first-out (LIFO) method
  54. 54For a company using LIFO, the difference between inventory reported using LIFO and inventory using FIFOLIFO reserve
  55. 55A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost.Lower-of-cost-or-market (LCM)
  56. 56Basic goods that will be used in production but have not yet been placed in production.Raw materials
  57. 57An actual physical-flow costing method in which particular items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory.Specific identification method
  58. 58Average cost that is weighted by the number of units purchased at each unit cost.Weighted-average unit cost
  59. 59That portion of manufactured inventory that has begun the production process but is not yet complete.Work in process
  60. 60A _____ sells to another business, which will sell to a consuming customer.wholesaler
  61. 61On what amount is a sales discount based?Invoice price less returns and allowances
  62. 62Which of these accounts normally have a debit balance? * Sales Discounts only *Neither Sales Discount nor Sales Returns and Allowances *Sales Returns and Allowances only *Both Sales Discounts and Sales Returns and AllowancesBoth Sales Discounts and Sales Returns and Allowances
  63. 63____ is the difference between net sales and cost of goods sold.Gross profit
  64. 64How to find operating expenses?Gross Profit - Net Income = Operating Expenses
  65. 65The three components of the fraud triangle are ________.Opportunity
    Financial Pressure
    Rationalization
  66. 66Reasonable assurance rests on the premise that ____________________.the costs of establishing controls should not exceed their expected benefit.
  67. 67Adjusting entries are made to ensure that: *Expenses are recognized in the period in which they are incurred. *Revenues are recorded in the period in which the performance obligation is satisfied. *Balance sheet and income statement accounts have correct balances at the end of an accounting period. *All of these answer choices are correct.All are correct
  68. 68Cash received before services are performed which is recorded as a debit to a Cash account and a credit to a liability account is called ______.unearned revenue
  69. 69Adjustments for prepaid expenses decrease ____ and increase ______.assets
    expenses
  70. 70If the adjusting entry is not made for unearned revenues, the result will be to _______________.overstate liabilities and understate revenues.
  71. 71Which account will have a zero balance after a company has journalized and posted closing entries?service revenue
  72. 72The economic life of a business can be divided into artificial time periods.Periodicity Assumption
  73. 73The generally accepted accounting principle which dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied is the _________.revenue recognition principle.
  74. 74Under the __________, cost of goods sold is determined at the end of the accounting period.periodic inventory system
  75. 75When credit terms of 1/15, n/60 are offered, how long is the discount period?15 days
  76. 76On what amount is a sales discount based?Invoice price less returns and allowances
  77. 77Inventory should include all goods owned by the company regardless of whether the company holds physical possession or not. Goods held on _____ are owned by others and should not be included.consignment
  78. 78Equipment is/isn't an inventory accountISN'T
  79. 79FOB shipping point = ____ FOB destination = ____buyer pays shipping
    seller pays shipping
  80. 80Sales Revenue - Sales Discount - Cost of Goods Sold = ___________Gross Profit
  81. 81—

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Flashcards on Accounting 201 Exam, created by Faizan Ahmed on 16/03/2016.
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Faizan Ahmed
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