Accounting Terms and Concepts, Quizzes of Financial Accounting

Download Accounting Terms and Concepts and more Quizzes Financial Accounting in PDF only on Docsity! TERM 1 FOB Shipping Point DEFINITION 1 Buyer Pays Freight TERM 2 FOB Destination DEFINITION 2 Seller Pays Freight TERM 3 Net Sales Formula DEFINITION 3 Sales - sales discounts - sales returns and allowances - credit card discounts TERM 4 Estimate of bad debt expense adjusting entry should be made DEFINITION 4 at the end of an accounting period. TERM 5 Net Realizable Value(NRV) Formula DEFINITION 5 Accounts Receivable(A/R) - AFDA TERM 6 When customer's A/R is uncollectable... DEFINITION 6 the amount is removed from A/R and charged to AFDA, thus resulting in NO EFFECT on A/R. TERM 7 A/R Turnover Ratio DEFINITION 7 Net Sales/ Average A/R TERM 8 Average Age(collection period) of A/R DEFINITION 8 365/ A/R turnover ratio TERM 9 Internal Control DEFINITION 9 procedures designed to safeguard ALL assets and ensure accuracy of financial records. TERM 10 Bank Balance DEFINITION 10 +Deposits in Transit(DIT)-Outstanding Checks+/- Errors TERM 21 During Periods of Rising Prices DEFINITION 21 LIFO gives higher COGS TERM 22 During Periods of lowering prices DEFINITION 22 FIFO gives lower COGS TERM 23 Fixed(Tangible) Assets DEFINITION 23 Property, Plant, Equipment (PP&E) TERM 24 Intangible Assets DEFINITION 24 subject to amortization-Rights, privileges, competitive advantages that result from ownership of long-lived assets that don't posses physical form.-Recognized on B/S-patents, trademarks, copyrights, technology, franchises, lease holds-Not Recognized on B/S-Internal Research Development, Advertising, Reputation, Market Value of trademarks, Patents, copyrights. TERM 25 Capitalize DEFINITION 25 -to record in ASSET account-Extraordinary repairs & additions-Allocated over time as depreciation-Capitalized costs assigned to depcreciable fixed assets must be charged against revenue(through systemic allocation) as they help generate revenue(Matching principle) as they are used up to benefit the business. TERM 26 Revenue Expenditure DEFINITION 26 to write off, as was used up-ordinary repairs and maintanance-Income Statement expense account is Dr.- Recognized as expense-Lower than if capitalized as all is expensed. TERM 27 Straight Line Formula DEFINITION 27 1/Life * (Cost- Salvage) TERM 28 Double Declining Balance(DDB) DEFINITION 28 NBV(Cost- Accumulated Depreciation) * 2 SLR TERM 29 Units of Production Formula DEFINITION 29 (Cost - Salvage)/ total estimated units produced TERM 30 Fixed Asset Turnover Ratio DEFINITION 30 Net Sales/ Average Net Fixed Assets(PP&E) TERM 31 Average Age of PP&E DEFINITION 31 Accumulated Depreciation/ Depreciation Expense TERM 32 Amortization of Costs is Usually DEFINITION 32 Straight-Line TERM 33 Goodwill DEFINITION 33 Excess Purchase price over identifiable net assets of the firm acquired. Amortize is no longer permitted of this asset. It has an indefinite life and must be evaluated for impairment, at least annually. TERM 34 Gross Profit DEFINITION 34 Net Sales - COGS