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Accounting: CH 8-11

Terms in this set (27)

A note receivable due in 18 months is listed on the balance sheet under the caption
investments
The two methods of accounting for uncollectable receivables are the allowance method and the
direct write-off method
The collection of an account that had been previously written off under the allowance method of accounting for uncollectable
does not affect net income in the period it is collected
Allowance for Doubtful Accounts is classified as a(n) ___ and has a normal ___ balance.
contra-asset, credit
The amount of the promissory note plus the interest earned on the due date is called the
maturity value
If the maker of a promissory note fails to pay the note on the due date, the note is said to be
dishonored
When referring to a note receivable or promissory note
the note may be used to settle an accounts receivable
A characteristic of a fixed asset is that it is
used in the operations of a business
Land acquired so it can be resold in the future is listed in the balance sheet as a(n)
investment
All leases are classified as either
capital leases or operating leases
What is NOT needed for the calculation of straight-line depreciation?
united produced
When a company sells machinery at a price equal to its books value, this transaction would be recorded with an entry that would include the following:
debit Cash and Accumulated Depreciation; credit Machinery
The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
depletion
Expenditures for research and development are generally recorded as
current operating expenses
Which intangible assets are amortized over their useful life?
patents
A current liability is a debt that is reasonably expected to be paid
within one year
The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)
liability
What taxes would be deducted in determining an employee's pay?
FICA taxes
Most employers are required to withhold from employees what employment taxes?
FICA tax
What is included in the employer's payroll taxes?
SUTA, FUTA, FICA
Vacation pay payable is reported on the balance sheet as a(n)
current liability or long-term liability, depending upon when the vacations will be taken by employees
Characteristics of a corporation include
shareholders who have limited liability
A disadvantage of the corporate form of business entity is
corporations are subject to more governmental regulations
What is NOT true of a corporation?
...
The entry to record the issuance of common stock at a price above par includes a debit to
...
The authorized stock of a corporation
...
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
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