Financial Accounting Ch 5

Patents – Granted by Feds. Holder has right to produce/sell product for 20 years.
Outlays or expenditures – Charges made to the project or program.
The direct write off method is generally not permitted for financial reporting purposes because – expenses (bad debts) are not properly matched with the revenues (credit sales) they help to generate
What type of intangible asset is a contractual agreement under which the provider presents the providee the right to sell certain products? – Franchise or License
No Par Stock – Stock that does not have a par value per share. Only 9% of companies have no-par outstanding
Sales – Income statement
sales revenue/ revenue
Receipts – an amount of money coming into the business
Disclosure – If accrual made – nature and amount (if necessary so that financial statements not misleading)
If asserted claim – probable or reasonably possible impairment or liability
If unasserted claim – manifestation of awareness of possible claim OR probable that claim will be asserted, AND probable or reasonably possible impairment or liability
Nature of contingency AND estimate of amount or range of possible loss (or statement that no estimate can be made)
statement of retained earnings – the statement that summarizes the income earned and dividends paid over the life of a business
partnership – simple to establish, shared control, broader skills and resources, tax advantages
An A-B-BCD-B-BCD design evaluates the effect of B compared to C.
Double-entry Accounting – the recording of debit and credit parts of a transaction
Net income calculated – Net Income= Revenues – Expenses
invoice – A form describing the goods or services sold, the quantity, the price, and the terms of sale
corporation – A legally created entity that is owned by one or more persons.
Delivery Cycle Time – Time from receipt of customer to actual product delivery
accumulated depreciation – the total amount of depreciation expense that has been recorded since the purchase of a plant asset.
objectivity concept – A concept of accounting that requires accounting records and the data reported in financial statements to be based on objective evidence.
An A-B-BCD-B-BCD design evаluаtes the effect оf B cоmpаred tо C.
Business Transaction – -a financial event that causes a change in its financial position
restrictive endorsement – and endorsement restricting further transfer of a checks ownership
What is it called when a company continuously experiences a negative cash flow? And what does it mean? – It is called a continuous negative cash flow. This means that the enterprise is running out of cash and may become insolvent.
accounts receivable for aging accounts – estimates the balance in the allowance account and then computes bad debt expense
Corporation – -Any number of owners (including just 1).
-Owners do not have personal liability for the company debts.
-Company profits are reported and taxed on a corporate tax return.
-Stockholders are taxed on any dividends received from the corporation and reported on Schedule B of owner's individual tax return.

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