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53 Cards in this Set
- Front
- Back
Reporting the financial condition of a business at a point in time, and the changes in the financial condition of a business over a period of time are the two major objectives of
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Financial accounting
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A business strategy is an integrated set of plans and actions designed to enable the business to
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Gain an advantage over competitors
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Which of the following is an example of an intangible asset?
a. Patent b. Cash c. Land d. Equipment |
a. patent
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What is the last part of the value chain sequence?
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Customer value
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Revenue
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is (are) the increase in assets from selling goods or services.
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Accounting is sometimes called the
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Language of business
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The portion of a corporation's net income retained in the business is called
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Retained earnings
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More than 70% of businesses are organized as what type of business?
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Sole Proprietorship
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A summary of the cash receipts and cash payments for a specific period of time is a(n)
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Statement of cash flows
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Under a differentiation strategy, a business designs products that possess __________, for which customers are willing to pay a premium price.
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Unique Attributes
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Financing activities involve obtaining __________ to operate a business.
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funds
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The best definition of assets is
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Resources belonging to the company that are expected to benefit future operations
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of the following is NOT an example of a capital market stakeholder?
a. Banks b. Owners c. Employees d. Stockholders |
c. Employees
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Costs incurred in operating a business are also known as
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expenses
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When a business borrows from a vendor (supplier) the liability is called a(n)
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Account payable
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Zorro Corporation purchased a building for $80,000 cash. On the Statement of Cash Flows, this transaction would be classified as:
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Cash Flows from Investing Activities.
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Eagle Eye, Inc. a corporation, received an additional investment of $5,000 cash in exchange for shares of capital stock. How does this transaction affect Eagle Eye's accounts?
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Increase capital stock and increase cash by $5,000 each
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Under the accrual basis of accounting, transactions are recorded
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Only when cash is received or paid
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On June 1, Green Company purchased $1,200 worth of supplies on account.On December 31, Green determines that it has $700 of supplies on hand. What is the balance in the supplies account after adjustment?
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$700
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As prepaid insurance expires over time, the portion of the asset used becomes a(n)
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expense
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Accumulated depreciation is __________ to get the carrying or book value of the asset.
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Subtracted from equipment
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During September, Roane Co. received $4,000 from clients for services rendered and billed in a previous month. Which accounts will be affected and by what amounts
using the accrual basis of accounting? |
Cash will increase by $4,000 and accounts receivable decrease by $4,000
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Updating accrual accounting records prior to preparing financial statements is called
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The adjustment process
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Cash and other assets that are expected to be converted to cash or sold or used up within one year or less through the normal operations of the business are called
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Current assets
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An example of an accrued expense is
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Interest accrued on a note payable
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AirFlight Co. billed a client in February for flying lessons given in January. AirFlight
received the payment in March. Using accrual basis accounting, when should AirFlight record the revenue? |
January
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On April 1st, Thomas Company paid a $3,600 insurance premium on a three-year
insurance policy. This transaction |
Increases prepaid insurance and decreases cash by $3,600 each
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Accumulated depreciation is what type of account?
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Contra asset
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For EFG Co., the transaction "Purchase of store equipment with a note payable" will
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Increase assets and increase liabilities
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Which of the following statements is (are) true?
a. The effect of every transaction is an increase or a decrease in one or more the accounting equation elements b. The two sides of the accounting equation must always equal c. Stockholders' equity is increased by amounts invested by stockholders d. All are true |
d. ALL ARE TRUE
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Expenses that cannot be traced directly to operations are identified as
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Other expenses
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Which of the following is NOT an example of selling expenses?
a. Salespersons' salaries b. Office salaries c. Depreciation of store equipment d. Advertising |
b. Office salaries
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merchandise is purchased to for sale to customers, the cost is recorded in
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Merchandise Inventory
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Merchandise with an invoice price of $5,000 is purchased subject to terms of 2/10, n/30,
FOB destination. Transportation costs paid by the seller totaled $125. What is the total cost of the merchandise? |
$4,900
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sale of $30,000 of merchandise on account would include a(n)
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decrease in Merchandise Inventory
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Quarles Company had $20,000 in beginning merchandise inventory at 1-01-05. They Purchase $215,000 dollars worth of merchandise. During
the year, the company sold goods costing $200,000 for $390,000 cash. What was its ending merchandise inventory balance? |
$ 35,000
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When purchases of merchandise are made for cash, the transaction
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increases Merchandise Inventory; decreases Cash
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FOB destination means
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The seller is responsible for transportation costs
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Compute conversion costs given the following data: Direct Materials, $247,800; Direct Labor, $183,400; Factory Overhead, $121,300.
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$304,700
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Recording direct labor costs in a job order cost accounting system will:
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increase Work in Process and increase Wages Payable
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Recording the cost of jobs shipped and customers billed will decrease
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Finished Goods Inventory
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Which of the following costs would not be classified as part of factory overhead
a. the cost of factory supplies used b. the cost of depreciation on manufacturing equipment c. the cost of production supervisors' salaries d. the cost of direct labor used |
the cost of direct labor used
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Which of the following manufacturing costs is an indirect cost of producing a product
a. Oil lubricant cost used for factory machinery b. Commission cost for sales personnel c. Hourly wage cost of an assembly worker d. Memory chip cost for a microcomputer manufacturer |
Oil lubricant cost used for factory machinery
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Selling and administrative costs are referred to as
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period costs
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The cost of a manufactured product generally consists of
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direct labor cost, direct materials cost, and factory overhead cost
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During May, Latimer Company purchased materials totaling $45,700. It issued $41,000 of
materials to production, identifying $37,000 of those as direct materials and $4,000 as indirect materials. The decrease to raw materials inventory in May will be |
$41,000
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If the amount of factory overhead cost incurred exceeds the amount applied, factory overhead costs have been
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Underapplied
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Factory overhead costs are applied to:
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Work in process inventory
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Which of the following is part of factory overhead cost?
a. Sales commissions b. Depreciation of factory buildings c. Depreciation of office equipment d. Direct materials used |
Depreciation of factory buildings
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Costs that are treated as assets until the product is sold are called
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product costs
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What types of inventories does a manufacturing business report on its balance sheet?
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raw materials inventory, work in process inventory, and finished goods inventory
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Which of the following is an example of a direct materials cost for a furniture manufacturer?
a. Repairs and maintenance cost for the factory building b. Factory heating and lighting cost c. Cost of upholstery fabric sewing wages d. Upholstery fabric cost |
d. Upholstery fabric cost
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During April, its first month of operations, Sounder Company recorded the following costs:
Direct materials $225,700 Indirect materials 9,200 Direct labor 124,900 Indirect labor 5,100 Other factory overhead 34,600 Sounder applies factory overhead to production at a rate of 40% of direct labor cost. It ended the month of April with a balance of $120,000 in work in process inventory. What is Sounder's cost of goods manufactured for April? and For April, Sounder's factory overhead was: |
$280,560
and overapplied by $1,060 |