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Flashcards in Topic 3 Deck (24):
1

A permanent general ledger account is one that

carries its balance forward from one accounting period to the next

2

A, L, OE, and asset CON accounts are _____ accounts

permanent

3

A _______general ledger account is one that begins each new accounting period with a zero balance.

temporary

4

R, E, and revenue/expense CON accounts are ______ accounts

temporary

5

_______ accounts are the ingredients of a statement of financial position

permanent

6

__________ general ledger accounts are the ingredients of a statement of comprehensive income

temporary

7

The Income Summary account is itself a _______ general ledger account, and therefore it also must be closed off in order to begin the new year with a ____ balance.

temporary, zero

8

The Income Summary account is closed off to a ______ general ledger account called ______.

permanent, "retained earnings" ( RE)

9

The " retained earnings" account is an ___ account and, as such, it appears in the sharholders' equity section of a company statement of_________

OE, financial position

10

The "negative owners' equity" CON accounts are _____general ledger accounts and therefore also _______ at the end of each accounting period.

temporary, closed off

11

But instead of being closed off to Income Summary, "negative owners' equity" CON accounts are closed off directly to the ______ account.

RE

12

we shall refer to "negative owners' equity" CON accounts as _________accounts.

negative appropriation

13

"negative owners' equity" CON accountshave the effect of reducing ______

retained earnings

14

4 most common negative appropriation general ledger accounts:
- interim ______ paid a/c
- final _______ declared a/c
- transfer to [name] reserve a/c
- transfer from [name] reserve a/c

dividends

15

Broadly speaking, dividends can be of two types - ____ and _____

interim and final

16

In turn, any dividend (interim or final) can be usefully regarded as progressing through three distinct stages:
- the _______by directors that a dividend be paid;
- the_________ (that is, formal confirmation) of the dividend;
- the________ of the dividend.

recommendation
declaration
subsequent payment

17

In the case where directors do not have the constitutional power to declare dividends _____ (that is, where directors must seek shareholder approval prior to paying a dividend), no accounting entries must be made until ______for payment arrives.

unilaterally
the actual day

18

The recommendation, the declaration, and the payment of an _____dividend occur wholly within the same financial year. This stands in marked contrast to a _____ dividend.

interim, final

19

Regardless of when declaration takes place, however, the ______payment of a final dividend will always take place in the next financial period. This is because it takes time to physically prepare and draw dividend cheques and/or transfer funds to eligible shareholders.

actual

20

Accounting for interim dividends:

When directors recommend an _____dividend, they are assumed (in ACC80006) to also have the power to simultaneously ______and _____the dividend. This will trigger the following journal entry:

Dr Interim dividend paid
Cr Bank

The _____is to a negative appropriation account, whereas the _____is to an asset account. At year end, the following balance day ______is made to close the negative appropriation account:


Dr Retained earnings
Cr Interim dividend paid

interim ; declare ; pay




debit ; credit ; adjustment



21

for theoretical purity and consistency, as well as for Topic 6 purposes later in the ACC80006 syllabus, you are requested to use a _________ account for all dividends, and close these accounts by way of balance day ________.

negative appropriation ; adjustments

22

Equity, in the company form of organisation, is classified into three main parts:_____, _____, _____

capital, other reserves, retained earnings

23

Another name "negative owners' equity"

"Negative appropriation"

24

The RE account is also known under a variety of different names or synonyms - ______________ just to name a few.

retained profits,
profit and loss appropriation,
income appropriation,
unappropriated profits,
or accumulated profits/losses