Accounting Chapter 6

convertible bond – bonds option to convert or change them into common stock; change for a set number or issuers shares
Which of the following pronouncements were issued by the Accounting Principles Board?

A. Statements of Financial Accounting Concepts

B. Accounting Research Bulletins

C. Opinions

D. Statements of Position – C. Opinions

Unearned revenue – Customers prepay for service
Account – Device used to provide a record of increases and decreases in each item
Retained Earnings – total earnings of the company less all amounts returned to stockholders to date since the first day of operations

Cumulative, at the beginning of the year
+ Current year earnings reported on income statmt.
– Dividends paid to stockholder during current yr.
= Cumulative, at the end of the year

proving cash – determining that the amount of cash agrees with the balance of the cash account accounting records.
What is depreciation – The process of systematically allocating the cost of a long-term asset to each of the period it is used
Extraordinary Items – unusual and infrequent; flood in the desert of california
Convertible Bond – May be converted to other securities of the issuer (usually common stock).
A company's actual performance should be compared against budgeted amounts for the same accounting period so that:
a. adjustments for future conditions can be included
b. no feedback is possible
c. inefficiencies of the past year can be included
d. a rolling budget can be implemented – a. adjustments for future conditions can be included
If someone needs a favor, being that person is defined as being reliable.
Which of the following practices by a credit card company results in lower interest charges to the cardholder?
A. The card company states interest as a monthly percentage rather than an annual percentage.
B. The card company allows a grace period before interest is accrued.
C. The card company allows cardholders to skip payments on their cards.
D. The card company calculates finance charges from the date of purchase to the date the amount is paid. – B
Land – This does not qualify as a current asset
ORGANIZATIONAL CHART – SHOWS HOW RESPONSIBILITY IS DIVIDED AMONG MANAGERS AND SHOW FORMAL LINES OF REPORTING AND COMMUNICATION
If sоmeоne needs а fаvоr, being thаt person is defined as being reliable.
Receipts – A cash inflow of money coming from operating the business.
for-profit businesses – operate to earn money for their owners
Useful life – Period a non-current asset is expected to be available for use

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