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Flashcards in midterm - accounting Deck (26):
1

What are job tasks or functions of an accountant?

  • prepare and interpret financial records
  • follow budgets
  • make business decisions
  • maintain and review business records
  • prepare budgets

2

What is the difference between account payable and accounts receivable?

  • accounts payable is how much you or business owes someone
  • accounts receivable is how much a customer owes you

3

What must a business do to survive?

  • operate at a profit
  • attract individuals skillful enough to run the business

4

What is the difference between management accounting and financial accounting?

  • management accounting reports information to managers of the company to assist in decision making, reports are for internal use only
  • financial accounting reports information to external users (individuals not involved in day-to-day business operations), such as investors

5

What is the accounting equation?

Assets = Liabilities + Owner's Equity

What you own = How it was paid for

6

Why is accounts receivable an asset?

because it is money that you will be receiving and cash is an asset

7

entry level accounting job that prepares forms and reports

bookkeeper

8

What is fiscal year?

  • aka financial year or budget year
  • period used for calculating annual (yearly) financial statements in business or other organizations
  • does not always begin in january and end in december
  • runs over any 12 month period
  • can be october thru september, august thru july, etc

9

Penn State University sells most of their assets during football games.  They sell $850 worth of sweathshirts, $1142 worth of blankets, and $999 worth of jerseys.  They pay rent which is a fixed expense of $850, utilities which are a variable expense of $359 and supplies expense which is a variable of $2500.  Did they make a profit or loss?

  • revenue: $2991
  • exenses: $3709
  • loss: $718

10

Starbucks sells coffee and tea at the local shop.  On Mondays they sell $700, Tuesdays they sell $857, Wednesday they sell $998 and Thursdays they sell $475.  They have expenses of $854 for coffee supplies which is a variable, $1500 for rent which is a fixed expense, and $540 for cups which is a variable expense.  Did they make a profit or loss?

  • revenue: $3030
  • expense:  $2894
  • profit:  $136

11

Toys R Us sold all of its assets on black friday.   They sold 457 barbie dolls $19.99 each, 884 hot wheel cars at $1.99 each, 441 video games at $29.99 each and $8874 worth of Frozen merchandise.  They paid their mortage payment of $11524, a maintenance bill for the heater which is a periodic expense of $1500, real estate taxes of $7451 and telephone bill of $150.  Did they make a profit or loss?

  • revenue:  9135.43 + 1759.16 + 13225.59 + 8874 = 32994.18
  • expenses: 20625.00
  • profit:  $12369.18

12

Chik fil et had cash outflow of $874, $21, $552, and $125.  They had cash inflow of $129, $367, $11, and $99.  Did they bring in or spend more?

  • inflow: $606
  • outflow: 1572
  • spent more/ loss:  -966

13

general increase in value of property that occurs over time

appreciation

14

decrease in value of property as it becomes old

depreciation

15

  • money you owe for something
  • buy now, pay later
  • loans/notes or accounts payable

liability

16

examples of liabilities

  • car loan
  • mortgage
  • supplies purchased on credit to run company

17

examples of items that appreciate

  • house
  • land
  • antiques

18

examples of items that depreciate

  • cars
  • eletronics
  • computers

19

examples of assets

  • house
  • barbie collection
  • car
  • jewelry

20

something you own of value

asset

21

cash or goods used to generate income either by  investing in a business or a different income property

capital

22

What is the asset equation?

Assets = Liabilities + Owner's Equity

23

value of owner's investment

owner's equity

24

What are some payroll deductions people pay?

  • Income taxes:  paid to federal, state & local governments
  • Social Security & Medicare:  aka FICA
  • Unemployment taxes
  • health insurance premiums
  • 401k contributions

25

What are some types of taxes people pay?

  • sales tax
  • real estate taxes / property tax
  • estate tax / inheritance tax
  • payroll taxes

26

the legal process of reducing or eliminating an amount owed

bankruptcy