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jeremy harmon > Exam 3 Financial Accounting Review > Flashcards

Exam 3 Financial Accounting Review Flashcards

1
Q

International Accounting

A

Use their own currencies

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2
Q

What are 2 characteristics of the Available for Sale Method?

A

Initially recorded at cost

Reported at market value on balance sheet

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3
Q

Long Term Investments are recorded where?

A

On the balance sheet

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4
Q

What is another name for Long Term Bond Investments?

A

Held To Maturity Investments

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5
Q

Issued

A

Number of shares sold to shareholders

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6
Q

Principal

A

Amount borrowed and usually in $1000 units

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7
Q

Hedging

A

Insurance and limits or qualifies by exceptions

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8
Q

Term Bond

A

All bonds mature at the same date

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9
Q

Stockholder elect who?

A

Board of Directors

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10
Q

Cumulative (in terms of preferred dividends)

A

Any unpaid dividends are carried forward until paid

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11
Q

How are Long Term Bond Investments reported?

A

Reported at amortized cost

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12
Q

What is 1 characteristics of a contra equity account in terms of Treasury Stock?

A

Reduces shareholders equity and assets

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13
Q

If the contingent liability is probable what happens when recording it?

A

Record if amount can be estimated

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14
Q

Authorized

A

Maximum number of shares a company can issue

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15
Q

What 3 things increase debits (ADE)

A

Assets
Dividends
Expenses

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16
Q

What 2 things is the Preferred Dividends rate expressed as?

A

Percent of par value

Dollar amount per share

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17
Q

What are the 2 parts of stockholders equity?

A

Paid In Capital

Retained Earnings

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18
Q

What are 6 examples of known amounts?

A 
Accounts payable 
Salaries tax payable
Short Term Notes Payable 
Payroll Liabilities 
Accrued Liabilities 
Unearned Revenues
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19
Q

What are 2 characteristics of Treasury Stock?

A

Company buys stock back

Contra-equity account

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20
Q

Outstanding

A

Number of shares currently in shareholders possession

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21
Q

Carrying Amount =

A

Face Value - Discount Balance

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22
Q

Maturity Date (Bond Terms)

A

Date bond is due

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23
Q

Serial Bond

A

Mature in installments

24
Q

If the contingent liability is reasonably probable what happens when recording it?

A

Include in Notes

25
Q

Why would a parent company and a subsidiary consolidate as if they were one company? (Consolidated Subsidiaries)

A

Want to eliminate reciprocal accounts

26
Q

What are the 2 classes of stock?

A

Common Stock

Preferred Stock

27
Q

What accounting method do you use when the investor owns up to 20%?

A

Available For Sale

28
Q

Consolidated Subsidiaries

A

Financial statements of a parent and its subsidiary are combined and consolidated as if they were one company

29
Q

What accounting method do you use when the investor owns 20%-50%?

A

Equity Method

30
Q

In terms of Consolidated Subsidiaries the investor is called what?

A

Parent Company

31
Q

Secured Bond

A

Claim on assets if bond not paid

32
Q

In terms of Consolidated Subsidiaries the investee is called what?

A

Subsidiary

33
Q

Date of Declaration

A

When the board of directors announce the dividend

34
Q

What are 2 characteristics of Small Stock Dividends?

A

Less than 25% of outstanding shares

Recorded at market value

35
Q

Preferred Stock

A

Claim on assets

36
Q

What are 2 examples of unknown amounts?

A

Estimated Warranty Payable

Contingent Liabilities

37
Q

If the contingent liability is unlikely what happens when recording it?

A

Do not report

38
Q

What 3 things increase with credit (LCR)

A

Liabilities
Common Stock
Revenue

39
Q

What are 2 characteristics of the Equity Method?

A

Investor has significant influence over investee

Investment is recorded at cost

40
Q

What are 2 characteristics of Large Stock Dividends?

A

Greater than 25% of outstanding shares

Recorded at par value

41
Q

What are the 4 types of bonds?

A

Term
Serial
Secured
Unsecured

42
Q

Current Liabilities

A

Obligations due within one year

43
Q

What accounting method do you use when the investor owns more than 50%?

A

Consolidation

44
Q

Treasury Stock

A

Difference between issued and outstanding

45
Q

When something is reported at amortized cost what happens to the bond? ( In Terms of Long Term Bond Investments)

A

Bonds carrying amount is amortized to face value at maturity value

46
Q

In terms of Consolidated Subsidiaries the investor owns how much of the stock?

A

Owns more than 50%

47
Q

What is the difference between short term investments and long term investments?

A

Short Term Investments
Must be liquid
Held for 1 year or less

Long Term Investments
Expected to be held longer than 1 year

48
Q

In terms of Consolidated Subsidiaries the investor controls the —–.

A

Investee

49
Q

Board of directors elect who?

A

CEO

50
Q

What are 2 differences between Premium and Discount?

A

Premium

  • issue price above face value
  • stated rate of interest greater than market

Discount

  • Issue price below face value
  • stated rate of interest less than market
51
Q

What 4 rights do the stockholders have?

A

Vote
Dividends
Liquidation
Preemption

52
Q

What is 1 example of a Long Term Liability?

A

Bonds

53
Q

Interest (Bond Terms)

A

Company must pay bondholders interest in regular intervals over the term of the bond

54
Q

Preemption

A

The right to maintain ownership

55
Q

Unsecured Bond

A

No claim on assets

56
Q

Dividends

A

Distributions to shareholders

jeremy harmon (108 decks)

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