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ACCT 2000 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

The process of planning, recording, analyzing, and interpreting financial information and economic events and communicating them to interested parties

A

accounting

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2
Q

3 forms of business

A

sole proprietorship, partnership, corporation

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3
Q

a business owned and managed by a single individual; simple to establish and has tax advantages, but is subject to personal liabilities.

A

Sole Proprietorship

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4
Q

Business owned by two or more people; liable to personal loss, but encompasses broader skills and resources

A

Partenership

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5
Q

a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law; easy to transfer ownership, easy to raise capital, no personal liability, but subject to double taxation.

A

Corporation

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6
Q

Users of financial information

A

internal and external users

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7
Q

managers, supervisors, and company officials who use financial info for internal reports and to plan, organize and run businesses.

A

internal/managerial accounting

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8
Q

investors, creditors, or regulators (IRS) that use financial info to make decisions on whether or not to buy or sell stock, or to loan a company money

A

external/financial accounting

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9
Q

enacted in response to the financial scandals to protect shareholders and the general public from accounting errors and fraudulent practices.

A

Sarbanes-Oxley act of 2002: (SOX)

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10
Q

3 types of economic events

A

Financing, investing, and operating

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11
Q

raising and obtaining money (creditors and issuing stock)

A

financing

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12
Q

purchase of assets needed to operate (delivery trucks and computer equipment)

A

investing

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13
Q

things that occur during day to day operations (electricity, employees, telephone service)

A

operating

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14
Q

Basic Accounting Equation

A

Assets = Liabilities + Stockholders’ Equity

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15
Q

resources owned by a business (cash, property, equipment)

A

Assets

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16
Q

amounts owed to creditors or suppliers (accounts/notes/bonds payable)

A

liability

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17
Q

The owners’ claim to assets (common stock, retained earnings)

A

Stockholders’ Equity

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18
Q

amounts received from issuing stock

A

common stock

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19
Q

net income retained in the business not paid out in dividends

A

retained earnings

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20
Q

amounts earned from sale of products or services performed; aka sales, service, or interest revenue

A

revenue

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21
Q

cash payments to stockholders; NOT expenses

A

Dividends

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22
Q

cost of assets consumed or services used; aka rent, utility, or interest expenses; cost of goods sold

A

Expenses

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23
Q

revenue > expenses

A

net income

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24
Q

revenue < expenses

A

net loss

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25
Q

4 financial statements

A

income statement, statement of retained earnings, balance sheet, statement of cash flows

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26
Q

reports money and expenses over a period of time

A

Income Statement

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27
Q

A financial statement that summarizes the amounts and causes of changes in retained earnings over a period of time.

A

Retained Earnings Statement

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28
Q

Reports on the assets, liabilities, and stockholders’ equity of the business as of a specific date.

A

balance sheet

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29
Q

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

A

Statement of Cash Flows

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30
Q

components of an annual report

A

financial statements, management discussions of past, present, and future of company, notes to the financial statements, and an auditor’s report on fairness of statements

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31
Q

Short-term or long-term liabilities that a business promises to repay by a certain date; balance sheet

A

notes payable

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32
Q

assets that are owned and are used as needed; balance sheet

A

supplies

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33
Q

assents that are held, such as stocks and bonds; balance sheet

A

investments

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34
Q

income earned from performing a service, billed and unbilled; income statement

A

service revenue

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35
Q

asset sold to create revenue; balance sheet

A

inventory

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36
Q

an asset created by selling goods on account; balance sheet

A

Accounts Receivable

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37
Q

cost of inventory that is sold, therefore an expense; income statement

A

cost of goods sold

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38
Q

liability on a balance sheet

A

Wages Payable

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39
Q

revenue created by “making a promise” of a service after a payment, therefore a liability recorded on a balance sheet

A

Unearned Service Revenue

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40
Q

A financial statement that reports assets, liabilities, and owner’s equity on a specific date.

A

Balance Sheet

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41
Q

A balance sheet that groups together similar assets and similar liabilities, using a number of standard classifications and sections.

A

Classified Balance Sheet

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42
Q

categories of assets

A

current assets, investments, PPE, and intangibles

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43
Q

assets that a company expects to convert to cash or use within the year or operating cycle; listed by liquidity

A

current assets

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44
Q

The average time required to purchase inventory, sell it on account, and then collect cash from customers—that is, go from cash to cash; we’re using 1 year for class.

A

operating cycle

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45
Q

the ease with which an asset can be converted into the economy’s medium of exchange

A

Liquidity

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46
Q

stocks and bonds of other companies or in land and buildings not currently being used in operating activities (for future use)

A

investments

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47
Q

assets with relatively long useful lives that are currently used in operating the business; aka fixed assets, plant assets, or PPE.

A

Property, Plant, and Equipment

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48
Q

accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value; land is NOT depreciated

A

depreciation

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49
Q

assets without physical substance (goodwill and copyright)

A

intangibles

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50
Q

amount paid for an existing business above the value of its other assets

A

goodwill

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51
Q

categories of liabilities

A

current liabilities and long-term liabilities

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52
Q

liabilities due within a short time, usually within a year; listed in order of magnitude

A

current liabilities

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53
Q

obligations that a company expects to pay after one year

A

long-term liabilities

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54
Q

categories of equity

A

common stock and retained earnings

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55
Q

Term used to describe the total amount paid in by stockholders for the shares they purchase.

A

common stock

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56
Q

earnings retained in the business NOT paid out in dividends

A

retained earnings

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57
Q

Company’s share profits to the shareholders based on the corporation’s performance.

A

dividends

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58
Q

3 types of accounting ratios

A

profitability, liquidity, and solvency

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59
Q

free cash flow ratio

A

net cash provided by operating activities - capital expenditures - cash dividends

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60
Q

profitability ratio

A

Net income/ revenue

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61
Q

earnings per share (EPS)

A

(net income - preferred dividends) / average common shares outstanding

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62
Q

Liquidity Ratios

A

working capital and current ratio

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63
Q

working capital

A

current assets - current liabilities

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64
Q

current ratio

A

current assets/current liabilities

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65
Q

debt to total asset ratio

solvency ratio

A

total liabilities/total assets

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66
Q

Basic Accounting Equation

A

Assets = Liabilities + Stockholders’ Equity

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67
Q

a set of accounting standards that is used in the preparation of financial statements

A

Generally Accepted Accounting Principles (GAAP)

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68
Q

U.S. government agency that oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception.

A

Security and Exchange Commission (SEC)

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69
Q

The primary accounting standard-setting body in the United States.

A

Financial Accounting Standards Board (FASB)

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70
Q

An accounting standard-setting body that issues standards adopted by many countries outside of the United States.

A

International Accounting Standards Board (IASB)

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71
Q

Issues auditing standards and reviews their performance of audit forms.

A

Public Committee Accounting Oversight Board (PCAOB)

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72
Q

it makes a difference to a financing user

A

Relevance

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73
Q

information that is complete, neutral, and free from error

A

Faithful Representation

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74
Q

Qualities of Useful Information

A

comparability, verifiable, understandability, consistency, timely

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75
Q

Assumptions in Financial Reporting

A

monetary unit, economic entity, periodicity, going concern

Image: Assumptions in Financial Reporting

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76
Q

An assumption that requires that only those things that can be expressed in money are included in the accounting records.

A

Monetary Unit Assumption

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77
Q

An assumption that every economic entity can be separately identified and accounted for.

A

Economic Entity Assumption

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78
Q

An assumption that the economic life of a business can be divided into artificial time periods.

A

Periodicity Assumption

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79
Q

The assumption that the company will continue in operation for the foreseeable future.

A

Going Concern Assumption

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80
Q

Accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users.

A

Full Disclosure Principle

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81
Q

dictates that companies record assets at their cost; only for assets that are actively traded

A

Historical Cost Principle

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82
Q

assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability)

A

Fair Value Principle

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83
Q

Providing information is costly. The cost of gathering the information should be weighed against the benefits users will receive from it

A

The Cost Constraint

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84
Q

the process of identifying the specific effects of economic events on the accounting equation

A

transaction analysis

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85
Q

Order of financial statements

A

income statement, statement of retained earnings, balance sheet, statement of cash flows

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86
Q

A financial statement showing the revenue and expenses for a fiscal period.

A

income statement

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87
Q

A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period.

A

retained earnings statement

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88
Q

A financial statement that reports assets, liabilities, and owner’s equity on a specific date

A

balance sheet

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89
Q

An assumption that the economic life of a business can be divided into artificial time periods

A

The Periodicity Assumption

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90
Q

The principle that companies recognize revenue in the accounting period in which the revenue is earned

A

The Revenue Recognition Principle

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91
Q

Expenses are matched with revenue

A

The Expense Recognition Principle

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92
Q

reporting income when it is earned and expenses when they are incurred

A

Accrual Basis Accounting

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93
Q

Reporting income when the cash is received and expenses when the cash is paid.

A

Cash Basis Accounting

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94
Q

Entries made at the end of an accounting period to ensure that the revenue recognition and expense recognition principles are followed; DO NOT FOLLOW CASH AND NEVER ADJUST THE CASH ACCOUNT

A

Adjusting entries

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95
Q

Adjusting entries for either prepaid expenses or unearned revenues.

A

deferrals

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96
Q

expenses paid in cash before they are used or consumed (equipment, prepaid insurance, supplies, depreciation)

A

prepaid expenses

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97
Q

liability created by receiving revenue in advance.

A

unearned revenue

98
Q

asset that is deferred on an income statement or balance sheet

A

Prepaid Insurance

99
Q

expense items that are deferred on an income statement or balance sheet

A

supplies

100
Q

cost allocation, not valuation

A

depreciation

101
Q

an account that is offset against an asset account on the balance sheet

A

contra-asset account

102
Q

the total amount of depreciation expense that has been recorded since the purchase of a plant asset

A

Accumulated Depreciation

103
Q

recognition of an expense or revenue that has been incurred or earned but has not yet been recorded; “building up” the expenses or revenue

A

accrual

104
Q

revenue earned in one fiscal period but not received until a later fiscal period

A

accrued revenue

105
Q

expenses incurred but not yet paid in cash or recorded

A

accrued expenses

106
Q

Interest Formula

A

face value of note (P) × annual interest rate (R) × time in terms of one year (T) = interest

107
Q

A report that accounts for the differences between the bank statement and a checkbook balance

A

bank reconciliation

108
Q

a disbursement system that uses wire, telephone, or computer to transfer cash from one location to another

A

Electronic Funds Transfer (EFT)

109
Q

A report of deposits, withdrawals, and bank balances sent to a depositor by a bank

A

bank statement

110
Q

causes for a reconciliation

A

time lags and errors

111
Q

adjustments to the bank balance

A

+ deposits in transit
- outstanding checks
+/- bank errors

112
Q

deposits recorded by the depositor that have not been recorded by the bank

A

deposits in transit

113
Q

checks issued and recorded by a company that have not been paid by the bank

A

outstanding checks

114
Q

posting errors made by the bank that either incorrectly increase or decrease the bank balance

A

bank errors

115
Q

Adjustments to the Book Balance

A

+ unrecorded receipts (EFTs)
- unrecorded payments (EFTs)
- NSF (bounced checks)
+/- company errors

116
Q

receipts of cash earned that have been deposited in the bank

A

unrecorded receipts (EFTs)

117
Q

errors in accounting made by the company that can either incorrectly increase or decrease the book balance

A

company errors

118
Q

the status of a checking account that does not have enough money to cover transactions

A

NSF (bounced checks)

119
Q

analysis only used for adjusting BOOKS

A

tabular analysis

120
Q

a company that resells tangible products previously bought from suppliers; primary source of revenue is sales revenue

A

Merchandising Company

121
Q

Income Measurement

A

sales revenue - cost of goods sold = gross profit - operating expenses = net income (loss)

122
Q

the cost of the merchandise inventory that the business has sold to customers; expense

A

Cost of Goods Sold (COGS)

123
Q

Companies use either a perpetual inventory system or a periodic inventory system to account for inventory.

A

Flow of Costs

124
Q

The amount of inventory on hand at the beginning of a fiscal period

A

Beginning Inventory

125
Q

the actual count of merchandise at the end of a fiscal period

A

Ending Inventory

126
Q

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

A

periodic inventory system

127
Q

A 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.

A

perpetual inventory system

128
Q

a return of goods from the buyer to the seller for cash or credit

A

purchase return

129
Q

a deduction made to the selling price of merchandise, granted by the seller, so that the buyer will keep the merchandise

A

purchase allowance

130
Q

price that revenue is recorded at when taking inventory

A

selling price

131
Q

cost that inventory is recorded at when taking inventory

A

Inventory Cost

132
Q

an account that is offset against a revenue account on the income statement; prevents reductions of sales

A

contra revenue account

133
Q

Gross Profit

A

net sales - cost of goods sold; profit SOLELY from sale of inventory

134
Q

FIFO, LIFO, and average cost; systematic assumptions about the flow of inventory, used by companies to value their inventory; company must use its selected cost flow assumption consistently from one period; choose a cost flow assumption that clearly reflects periodic income

A

cost flow assumptions

135
Q

the inventory costing method that identifies the cost of the specific item that was sold; used by low-volume, ^ $ sellers; inventory have specific ID #s (cars, antiques, jewelry)

A

Specific Identification

136
Q

earliest (oldest) goods purchased are the first to be sold; follows physical flow of merchandise; reports lowest COGS and highest inventory net income (food, drinks)

A

FIFO (first in, first out)

137
Q

latest (newest) goods sold first; excludes goods sold in piles; rarely coincides with physical flow of merchandise; reports lowest inventory net income and highest COGS (clothes, toys)

A

LIFO (last in, first out)

138
Q

allocates cost of goods available for sale on the basis of weighted average cost; assumes inventory has about the same price;

A

Average cost

$ of goods available ÷ # of units in goods available

139
Q

current asset that shows the amount of cash the a business expects to collect; doesn’t have to be receivables

A

net realizable value

140
Q

Accounts receivable that cannot be collected, bad debts

A

uncollectible accounts

141
Q

an expense account to record losses from extending credit;

A

Bad Debt Expense

bad debt expense = existing balance - estimate

142
Q

A method of accounting for bad debts that involves charging receivable balances to Bad Debt Expense at the time receivables from a particular company are determined to be uncollectible; PROBLEM: no matching of revenue and expenses, which misleads financial statement users

A

direct write-off method

143
Q

A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period; estimate what will not be collected in period when sale was made; revenue and expenses match

A

allowance method

144
Q

contra-asset account containing the estimated uncollectible accounts receivable; recorded as decreases in allowance for doubtful accounts and expense account

A

Allowance for Doubtful Accounts

145
Q

net realizable value formula

A

accounts receivable - allowance for doubtful = net realizable value (total accounts receivable)

146
Q

A method of estimating the amount of bad debt expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts.

A

Percentage-of-receivables basis

147
Q

older uncollectibles are typically more likely to be uncollectible

A

aging

148
Q

multi-step balance sheet

A

1) find gross profit
2) subtract income from operations
3) find net income

149
Q

A non-operating activities section of the income statement that shows revenues and gains unrelated to the company’s main line of operations; interest revenue, dividend revenue, rent revenue, gain

A

other revenues and gains

150
Q

A non-operating activities section of the income statement that shows expenses and losses unrelated to the company’s main line of operations; interest expense, casualty losses, loss of sale of PPE, loss from strikes of employees

A

other expenses and losses

151
Q

Gross Profit Rate

A

gross profit/net sales (%)

152
Q

profit margin

A

net income/net sales (%)

153
Q

accounting used to provide information and analyses to managers inside the organization to assist them in decision making

A

Managerial Accounting

154
Q

Management Function Categories

A

planning, directing, controlling

155
Q

A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.

A

planning

156
Q

management function of directing human resources for the accomplishment of objectives

A

directing

157
Q

a management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not

A

controlling

158
Q

organizational chart of management

A

chart showing the flow of management in a business

159
Q

The process of making a raw material into a finished product; especially in large quantities.

A

Manufacturing

160
Q

Raw materials that can be physically and directly associated with manufacturing the finished product.

A

Direct Materials

161
Q

Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.

A

Indirect Materials

162
Q

the work of factory employees that can be physically and directly associated with converting raw materials into finished goods

A

Direct Labor

163
Q

The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.

A

Indirect Labor

164
Q

all manufacturing costs except direct materials and direct labor

A

Manufacturing Overhead

165
Q

product cost

A

direct materials + direct labor + manufacturing overhead

166
Q

period cost

A

selling expenses + administrative expenses

167
Q

The income statement for a manufacturer is similar to that of a merchandiser except for the cost of goods sold section

A

Manufacturer Financial Statements

168
Q

the manufacturing costs associated with the goods that were finished during the period

A

Cost of Goods Manufactured

169
Q

The sum of direct materials, direct labor, and manufacturing overhead incurred in the current period.

A

Total Manufacturing Costs

170
Q

Trends in managerial accounting

A
  • customer orientation
  • global economy
  • e-commerce
  • service economy
  • lean practices
  • value chain
171
Q

a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers’ needs

A

customer orientation

172
Q

economic activity that crosses national borders

A

global economy

173
Q

Web-based economic activities

A

e-commerce

174
Q

where the majority of people earn their living by providing a service rather than manufacturing a product

A

service economy

175
Q

Methods of doing business that facilitate cost reductions, cycle-time efficiencies, & inventory turn increases

A

Lean Practices

176
Q

The set of activities through which a product or service is created and delivered to customers.

A

value chain

177
Q

inventory method that lowers the cost of inventory

A

just in time inventory

178
Q

a comprehensive approach - led by top management and supported throughout the organization - dedicated to continuous quality improvement, training, and customer satisfaction

A

Total Quality Management

179
Q

a combination of performance measures directed toward the company’s long and short term goals and used as the basis for awarding incentive pay

A

Balanced Scorecard

180
Q

The study of the effects of changes in costs and volume on a company’s profits.

A

Cost-Volume-Profit Analysis

181
Q

The activity that causes changes in the behavior of costs.

A

Activity Index

182
Q

costs that vary directly in total with changes in the activity level. (Ex. direct materials, direct labor)

A

variable cost

183
Q

costs that remain the same in total regardless of changes in the activity level. (Ex. depreciation, property taxes, insurance, rent, salaries)

A

fixed costs

184
Q

Costs that contain both a variable- and a fixed-cost element and change in total but not proportionately with changes in the activity level; uses the high-low method

A

mixed costs

185
Q

a method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels

A

High-Low Method

186
Q

Assumptions underlying CVP analysis

A
  1. Selling price is constant throughout the entire relevant range
  2. Costs are linear over the relevant range
  3. In multi-product companies, the sales mix is constant
  4. In manufacturing firms, inventories do not change (units produced = units sold)
    Image: Assumptions underlying CVP analysis
187
Q

classifies costs as variable or fixed and computes a contribution margin

A

CVP income statement

188
Q

contribution margin

A

Sales - Variable Costs

189
Q

net income

A

contribution margin - fixed costs
OR
required sales - variable costs - fixed costs

190
Q

Unit Contribution Margin (UCM)

A

unit selling price - unit variable cost

191
Q

the quantity at which total revenue and total cost are equal

A

break-even point (BEP)

192
Q

break-even point in dollars

A

fixed costs / contribution margin ratio
OR
BEP in units x unit selling price

193
Q

Contribution Margin Ratio

A

unit contribution margin/sales price per unit

194
Q

The number of items or products or services sold by a business over a period of time.

A

sales volume

195
Q

The income objective set by management.

A

Target net income

196
Q

contribution margin technique for target net income

A

(fixed cost + target net income)/unit contribution margin

197
Q

difference between your actual or expected profitability and the break even point

A

margin of safety

198
Q

Margin of Safety in Dollars

A

Actual (Expected) Sales - Break-Even Sales

199
Q

Margin of Safety Ratio

A

Margin of Safety in Dollars / contribution margin ratio

200
Q

A formal written statement of management’s plans for a specified future time period, expressed in financial terms; presented by accountants, managed and taken care of by management

A

budget

201
Q

important basis for performance evaluation once adopted

A

Control Device

202
Q

Benefits of Budgeting

A
  • requires managers to plan
  • coordination and communication
  • benchmark for evaluating actual performance
  • creates early warning system
  • motivates personel
203
Q

principles of effective budgeting

A
  • Depends on a sound organizational structure with authority and responsibility for all phases of operations clearly defined
  • Based on research and analysis with realistic goals
  • Should be accepted by all levels of management
  • May inspire higher levels of performance or discourage additional effort
  • Invite each level of management to participate;
    “Participative Budgeting”
  • Risk of unreliable budgets greater when they are “top-down”
  • “Budgetary Slack”
204
Q

A budgetary approach that starts with input from lower-level managers and works upward so that managers at all levels participate.

A

participative budgeting

205
Q

the budgeted amounts for the coming year are literally imposed on middle and lower level managers

A

top-down budgeting

206
Q

occurs when managers intentionally understate expected revenues or overstate expected expenses so that budget goals are easier to meet

A

budgetary slack

207
Q

The intervals of time (usually 12 months, budgeting is short-term) into which a project period is divided for budgetary and funding purposes; must provide attainable goals and minimize seasonal or cyclical fluctuations while making reliable estimates.

A

Budget Period

208
Q

a set of interrelated budgets that constitutes a plan of action for a specific time period; operating + financial

A

master budget

209
Q

individual budgets that result in the preparation of the budgeted income statement; establish goals for sales and production personnel (sales budget, production budget, DM budget, DL budget, MO budget, selling + admin. budget, budgeted income statement)

A

operating budgets

210
Q

Individual budgets that focus primarily on the cash resources needed to fund expected operations and planned capital expenditures. (capital expenditure budget, cash budget, budgeted balance sheet)

A

financial budgets

211
Q

derived from the sales forecast; represents the management’s best estimate of sales revenue for the budget period.

A

sales budget

212
Q

shows the units that must be produced to meet anticipated sales; has no $ amounts

A

Production Budget

213
Q

An estimate of the quantity and cost of direct materials to be purchased.

A

Direct Materials Budget

214
Q

Shows both the quantity of hours and cost of direct labor necessary to meet production requirements; critical in maintaining a labor force that can meet expected production

A

Direct Labor Budget

215
Q

An estimate of expected manufacturing overhead costs for the budget period; distinguishes between fixed and variable costs.

A

Manufacturing Overhead Budget

216
Q

A projection of anticipated selling and administrative expenses for the budget period; distinguishes between fixed and variable costs.

A

selling and administrative expense budget

217
Q

important for end product of the operating budgets; indicates expected profitability of operations; provides basis for evaluating company performance; prepared from info of all previous operating budgets.

A

budgeted income statement

218
Q
  • a budget that estimates cash anticipated cash receipts (inflows and outflows) during a particular period like a month or a quarter
  • MOST IMPORTANT OUTPUT IN PREPARING FINANCIAL BUDGETS
  • increases effective cash management
  • indicates when excess cash will be available and allows for planning ahead to prevent disasters
  • includes cash receipts (+), cash disbursements (-), and financing (+/-)
  • shows beginning and ending cash balances
A

cash budget

219
Q
  • added to beginning balance on a cash budget
  • includes expected receipts from principle sources of revenue
  • usually cash and collections of credit, but also includes expected interest and dividend receipts, proceeds from planned sales of investment, PPE, and capital stock
A

cash receipts

220
Q
  • subtracted from total available cash on a cash budget

- includes expected cash payments for direct materials and direct labor, taxes, dividends, and PPE

A

cash disbursements

221
Q

shows expected borrowed funds and interest

A

financing

222
Q

a projected financial statement that forecasts the financial position at the end of the budgeted period; developed from the budgeted balance sheet from the preceding period (1 year) and budgets for the current year

A

budgeted balance sheet

223
Q

The budget that presents the company’s plan for purchasing property, plant, equipment, and other long-term assets.

A

capital expenditures budget

224
Q

shows the amount of goods to be purchased from suppliers during the period to reach the projected COGS

A

merchandising purchases budget

225
Q

a tax based on a person’s earnings

A

individual income tax

226
Q

changed rules as of 2018 that relate to individual income taxes

A

Tax Cuts and Jobs Act

227
Q

Income Tax Model

A

Gross Income - Deduction of Adjusted Gross Income = Adjusted Gross Income - Standard Deduction/Itemized Deduction (whichever is greater) = taxable income × tax rates/tax tables = tax liability - credits and payments = refund/payment

228
Q

the total amount of income from wages before any payroll deductions

A

gross income

229
Q

5 filing statuses

A

single, married filing jointly, married filing separately, head of household, surviving spouse or qualifying widow

230
Q

A stated amount that you may subtract from adjusted gross income instead of itemizing your deductions;

A

standard deduction

231
Q 
single - 
married filing jointly - 
married filing separately - 
head of household - 
surviving spouse/widow -
A

$12,000; 1,600 for old or blind (x2 for both)
$24,000; 1,300 if old or blind (x2 for both)
$12,000
$18,000
$24,000

232
Q

allowable deductions other than those for AGI, subtracted only if they exceed the taxpayer’s standard income.
includes:
- mortgage interest on personal residence (limited)
- state/local income tax
- medical expenses

A

itemized deduction

233
Q

the amount per unit of taxable item or activity

A

tax rates

234
Q

an amount of money that can be offset against a tax liability. Examples include the AOC and the LLC.

A

tax credits

235
Q

provides tax credits for first four years of postsecondary education, $2,500 per student if they are a dependent, and it phases out

A

American Opportunity Credit (AOC)

236
Q

A tax credit for all years of college or graduate school. It also applies to working adults taking classes to improve their work skills; 20% credit up to $10,000

A

Lifetime Learning Credit

237
Q

A $1,000 tax credit, subject to an AGI phase-out, for each qualifying child who is under age 17 at the end of the year and claimed as a dependent of the taxpayer.

A

Child Tax Credits

238
Q

Helps families reduce their child care costs by allowing them to deduct up to $5,000 of these costs from their federal tax obligation

A

Child and Dependent Care Tax Credit

239
Q

a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children

A

Earned Income Credit

240
Q

dates to file taxes

A

April 15th (October 15th if granted an extension)

ACCT 2000 (10 decks)

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