Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Financial Accounting > Final Exam - Fairchild > Flashcards

Final Exam - Fairchild Flashcards

(92 cards)

Start Studying
1
Q

What is the primary mechanism used to allocate resources in the United States?

A

open market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Difference between financial and managerial accounting:

A

FINANCIAL - external users (ex. investors, creditors, lawyers, financial analysts)

MANAGERIAL - internal users (ex. managers, employees who work within a business)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

GAAP

A

Generally Accepted Accounting Principles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

FASB

A

Financial Accounting Standards Board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Retained Earnings

A

increase in the business commitments to its stockholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Dividend

A

the distribution of assets generated through earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

accounting equation:

A

assets = liabilities + equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Common Stock

A

specific commitments made to investors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Liabilities

A

what we “owe”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Assets

A

what we “own”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Equity

A

what is “ours”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Investors

A

provide financial resources in exchange for ownership interests in businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Creditors

A

lend financial resources to businesses (bank)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Market:

A

group of people organized to exchange items of value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Revenue

A

economic benefit a company obtains from providing goods and services to its customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Expense

A

economic sacrifice a business incurs in the process of generating revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

General Ledger

A

a means for keeping record of a company’s total financial accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Liquidation

A

the process of selling off a company’s inventory, typically at a big discount, to generate cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How does the balance sheet work?

A

total assets balance with liabilities plus equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the statement of changes in stockholders equity?

A

CS:
bb
+
-
EB

and

RE:
bb
+
-
EB

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the statement of cash flows?

A

how a company obtained and used cash during the accounting period (Financing, Investing, Operating activities)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is in a temporary account?

A

revenue, expenses, dividend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Accrual

A

do service BEFORE cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Deferral

A

do service AFTER cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
How do you find the interest?
interest = principle x rate x time
26
How do you calculate the depreciation?
cost - salvage/life
27
How do you calculate the percentage change?
new - old/old
28
Accounts Receivable
receive money in the future
29
Accounts Payable
paying money in the future
30
Normal Balance Account
whichever side the plus sign is on with debits and credits
31
FOB
Freight On Board
32
Shipping Point
BUYER PAYS for shipping
33
Destination Point
SELLER PAYS for shipping
34
How do you find the NI?
Sales Revenue ------------------------------- Gross Margin -------------------------------- operating income +/- other <------------ (gains/losses) -------------------------------- pre tax -------------------------------- Net Income
35
Financial Leverage
use debt to buy more assets
36
Period Costs
the period when selling and administrative costs are incurred
37
Perpetual Inventory
account is adjusted continually throughout accounting period
38
Gains
difference between sales price and cost of land
39
How do you find the common size?
divide everything by sales
40
Financial Activity
debt, equity
41
Operating Activity
current assets
42
Investing Activity
long term assets
43
What are the requirements for double entry accounting system?
debit and credit
44
Balance of Account
total assets - total liabilities
45
What is posting?
reflects accounts balances immediately after closing entries were posted
46
What is the purpose of a journal?
provides chronological of business transactions
47
What is the purpose of closing entries?
to move all year 2 temporary accounts into RE
48
FIFO
first in, first out
49
LIFO
last in, first out
50
FIFO advantages and disadvantages:
ADVANTAGES: - higher NI - higher inventory DISADVANTAGES: - higher taxes - lower inventory turnover
51
LIFO advantages and disadvantages:
ADVANTAGES: - lower taxes - higher inventory turnover DISADVANTAGES: - lower NI - lower inventory
52
What is a direct write-off method?
an accounting method by which uncollectible accounts receivable are written off as bad debt (debit BDE (bad debt expense) credit AR)
53
What is the allowance method?
an estimated amount set aside to account for future expenses, potential losses, or reductions in asset values (debiting bad debt expense, crediting allowance for uncollectible accounts)
54
Net Realizable Value
amount of receivables a company estimates it will actually collect
55
Internal Controls
policies and procedures used to provide reasonable assurance that the objectives of an enterprise will be accomplished (ex. control environment, risk assessment, control activities, information and communication, monitoring)
56
Accounting Controls
designed to safeguard company assets and ensure reliable accounting records
57
Administrative Controls
concerned with evaluating performance and assessing the degree of compliance with company policies and public laws
58
Unqualified Opinion
most favorable opinion, auditors believe financial statements are in compliance with GAAP without material qualification, reservation or exception
59
Adverse Opinion
1 or more departures from GAAP are so FS don't present a fair picture of company's status
60
Qualified Opinion
company's FS are in compliance with GAAP but auditors have reservations about something in the statements
61
DM (debit memo)
decreasing
62
CM (credit memo)
increasing
63
Petty Cash
small amount of cash
64
Reconcile
come back into agreement
65
Gross Pay
what employees earn before taxes
66
Net Pay
what employees earn after taxes
67
Solvency
ability to repay liabilities in the long run
68
What is the inventory turnover ratio?
COGS -------- inv.
69
What is the markup on cost ratio?
GM ---------- COGS
70
What is the markup on sales ratio?
GM -------- sales
71
what is the operating cycle?
Cash AR Inv.
72
Current Assets
within a year
73
Long Term Assets
more than a year
74
PE (price to earnings) ratio:
market price per share ----------------------------------- earnings per share
75
What is APIC (additional - paid - in - capital)?
difference between book value and market value
76
What are capital assets?
short term assets
77
What is goodwill?
good name of a company
78
What is a tangible asset?
you can touch the idea of the asset
79
What is an intangible asset?
you can't touch the idea of the asset (ex. copywright, patent, trademark, goodwill)
80
What do we use with tangible assets?
depreciation (SL, UOP, DDB)
81
What do we use with intangible assets?
amortization (SL)
82
What do we use with natural resources?
depletion (UOP)
83
Operational Assets are
long term assets
84
Face Value
amount paid on the maturity of the bond
85
Stated Interest Rate
this is the interest rate applied to the interest payments made to bond holders
86
What is the nature of AR?
it is a current asset
87
What is the nature of ADA?
it is a contra asset, because it reduces the amount of an asset, in this case the AR
88
Notes Payable (NP)
a written promise made by the business to pay a debt, usually involving interest, in the future
89
Net Loss
when expenses are greater than revenue
90
Salary Payable
what you owe employees but have not yet paid
91
How do you find NRV?
A/R ------------ NRV
92

Financial Accounting (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions