Exam 3 Financial Accounting Review Flashcards Preview

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Flashcards in Exam 3 Financial Accounting Review Deck (56):
1

International Accounting

Use their own currencies

2

What are 2 characteristics of the Available for Sale Method?

Initially recorded at cost
Reported at market value on balance sheet

3

Long Term Investments are recorded where?

On the balance sheet

4

What is another name for Long Term Bond Investments?

Held To Maturity Investments

5

Issued

Number of shares sold to shareholders

6

Principal

Amount borrowed and usually in $1000 units

7

Hedging

Insurance and limits or qualifies by exceptions

8

Term Bond

All bonds mature at the same date

9

Stockholder elect who?

Board of Directors

10

Cumulative (in terms of preferred dividends)

Any unpaid dividends are carried forward until paid

11

How are Long Term Bond Investments reported?

Reported at amortized cost

12

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

Reduces shareholders equity and assets

13

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

Record if amount can be estimated

14

Authorized

Maximum number of shares a company can issue

15

What 3 things increase debits (ADE)

Assets
Dividends
Expenses

16

What 2 things is the Preferred Dividends rate expressed as?

Percent of par value
Dollar amount per share

17

What are the 2 parts of stockholders equity?

Paid In Capital
Retained Earnings

18

What are 6 examples of known amounts?

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

19

What are 2 characteristics of Treasury Stock?

Company buys stock back
Contra-equity account

20

Outstanding

Number of shares currently in shareholders possession

21

Carrying Amount =

Face Value - Discount Balance

22

Maturity Date (Bond Terms)

Date bond is due

23

Serial Bond

Mature in installments

24

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

Include in Notes

25

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

Want to eliminate reciprocal accounts

26

What are the 2 classes of stock?

Common Stock
Preferred Stock

27

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

Available For Sale

28

Consolidated Subsidiaries

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

29

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

Equity Method

30

In terms of Consolidated Subsidiaries the investor is called what?

Parent Company

31

Secured Bond

Claim on assets if bond not paid

32

In terms of Consolidated Subsidiaries the investee is called what?

Subsidiary

33

Date of Declaration

When the board of directors announce the dividend

34

What are 2 characteristics of Small Stock Dividends?

Less than 25% of outstanding shares
Recorded at market value

35

Preferred Stock

Claim on assets

36

What are 2 examples of unknown amounts?

Estimated Warranty Payable
Contingent Liabilities

37

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

Do not report

38

What 3 things increase with credit (LCR)

Liabilities
Common Stock
Revenue

39

What are 2 characteristics of the Equity Method?

Investor has significant influence over investee
Investment is recorded at cost

40

What are 2 characteristics of Large Stock Dividends?

Greater than 25% of outstanding shares
Recorded at par value

41

What are the 4 types of bonds?

Term
Serial
Secured
Unsecured

42

Current Liabilities

Obligations due within one year

43

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

Consolidation

44

Treasury Stock

Difference between issued and outstanding

45

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

Bonds carrying amount is amortized to face value at maturity value

46

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

Owns more than 50%

47

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

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

Long Term Investments
Expected to be held longer than 1 year

48

In terms of Consolidated Subsidiaries the investor controls the -----.

Investee

49

Board of directors elect who?

CEO

50

What are 2 differences between Premium and Discount?

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

What 4 rights do the stockholders have?

Vote
Dividends
Liquidation
Preemption

52

What is 1 example of a Long Term Liability?

Bonds

53

Interest (Bond Terms)

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

54

Preemption

The right to maintain ownership

55

Unsecured Bond

No claim on assets

56

Dividends

Distributions to shareholders

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