Exam 2 Flashcards
(15 cards)
Depreciation expense
Property plant and equipment
Amortization expense
Intangibles - patents, trademarks, copyrights, franchise rights
Depletion expense
Natural resources - oil, mineral deposits
What is book value
Original capitalized cost - accumulated depreciation
What principle of accounting required adjusting entry for prepaid expenses?
Matching principle
Adjusting entry principle for revenue
Revenue recognition
What are real accounts?
All accounts on a balance sheet
(Assets, liabilities, capital stock, retained earnings)
Cumulative running balance
Nominal accounts
All income statement (revenues and expense) and includes dividends accounts
Closed at end of year and transferred to retained earnings
What does 1/15 N/45 mean?
Customer can take 1% discount if paid in 15 days. Full balance due in 45
What type of account is sales discount
Contra revenue (sales)
Allowance for bad debt
Contra asset
Real account
Reduces accounts receivable
GAAP rules for inventory
Can use any method but must be consistently used over time
What are internal controls?
Policies and procedures implemented by a business designed to safeguard assets and ensure accurate accounting records
Internal Controls
- Separation of duties
- Proper authorization for transactions
- Adequate documentation and edited
- Independent checks on performance
What is a bond?
Note payable arising from borrowing of cash from the public
