Miscellaneous Flashcards
(18 cards)
What is the date for a balance sheet? Why?
At _____ b/c the balance sheet reports the financial position (amount of assets, liabilities, and stockholders’ equity) of an accounting entity at a particular point in time
What is the date for an income statement? Why?
For the [Period i.e. month, year] ended ____ b/c it reports a measure of performance of a business, revenues less expenses, during the accounting period
What is the date for a statement of stockholders equity? Why?
For the [Period i.e. month, year] Ended _____ b/c it reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period
Is Equipment and Land current assets or non current assets?
non current assets b/c they are to be used or turned into cash after the coming year
What is a current asset?
Assets that will be used or turned into cash within one year. Inventory is always considered a current asset regardless of the time needed to produce and sell it.
Why is interest expense a non-operating expense?
Interest expense is a non-operating expense when it is not part of a company’s main operations i.e. a retailer’s main operations are the purchasing and sale of merchandise, and a manufacturer’s main operations are the production and sale of goods. Neither the retailer nor the manufacturer has as its main operations the borrowing and lending of money
Is interest revenue an operating activity?
Interest Revenues are nonoperating revenues or income for companies not in the business of lending money.
What is the order of liabilities on a balance sheet?
The order of liabilities is not as structured as that of assets. Current liabilities will be listed first, but the order within current liabilities will vary from company to company.
Some companies will list the current liabilities in this order: 1) short-term notes or loans payable, 2) current portions of long-term debt, 3) accounts payable, 4) payroll related liabilities, 5) other accrued expenses, and 6) income taxes payable. Other companies will list its accounts payable ahead of its short-term debt.
When do you put parentheses ( ) around a number?
A negative amount, such as a negative balance in your check register A credit balance in an account that normally has a debit balance, or a debit balance in an account that normally has a credit balance or many other things
Do you include Retained Earnings as a closing entry?
Yes! closing entries are made to transfer balances in temporary accounts to Retained Earnings and to establish a zero balance in each of the temporary accounts
How do you calculate the current ratio? What does this show?
Current Assets / Current Liabilities
This shows whether the company has the short-term resources to pay its short-term debt
How do you calculate the net profit margin? What does this show?
Net Income / Net Sales (or Operating Revenues)
This shows how much of every sales dollar generated during the period is profit
How do you calculate the total asset turnover? What does this show?
Net Sales (or Operating Revenues) / Average Total Assets
[Avg. total assets: (beginning balance + ending balance) / 2]
This shows how efficient management is at using assets to generate sales
Define Accrued Revenue
Revenues that have been earned but not yet recorded because cash will be received after the services are performed or goods are delivered.
Define Accrued Expense
Expenses that have been incurred but not yet recorded because cash will be paid after the goods or services are used.
Define Deferred Revenue
Previously recorded liabilities that were created when cash was received in advance and that must be reduced for the amount of revenue actually earned during the period.
Define Deferred Expense
Previously recorded assets, such as Prepaid Rent, Supplies, and Equipment, that were created when cash was paid in advance and that must be reduced for the amount of expense actually incurred during the period through use of the asset.
Where does income tax expense go on the income statement?
NOT in operating expenses; at the bottom
