- StudyBlue
- Washington
- University of Washington - Seattle Campus
- Accounting
- Accounting 215
- Hodge
- Accounting 215 2nd Exam
Accounting 215 2nd Exam
Accounting 215 with Hodge at University of Washington - Seattle Campus
About this deck
By: Matt Bannerman
Textbook: Financial Accounting
Created: 2010-11-01
Size: 53 flashcards
Views: 100
Textbook: Financial Accounting
Created: 2010-11-01
Size: 53 flashcards
Views: 100
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Average Cost Method
Inventory costing method that assumes both cost of goods sold and ending inventory consist of a random mixture of all the goods available for sale.
Average Days in Inventory
Approximate number of days the average inventory is held. It equals 365 days divided by the inventory turnover ratio.
Cost of Goods Sold
Cost of the inventory that was sold during the period. Cost of goods sold is also referred to as cost of sales, cost of merchandise sold, or cost of products sold.
Finished Goods
Inventory items for which the manufacturing process is complete.
First-In, First-Out Method
Inventory costing method that assumes the first units purchased (the first in) are the first ones sold (the first out)
Freight-In
Cost to transport inventory to the company, which is included as part of inventory cost.
Freight-Out
Cost of freight on shipments to customers, and is included as a selling expense rather than part of the inventory costs.
Gross Profit
The difference between net sales and cost of goods sold.
Gross Profit Ratio
Measure of the amount by which the sale price of inventory exceeds its cost per dollar of sales. It equals gross profit divided by net sales.
Income before Income Taxes
Operating income plus nonoperating revenues less nonoperating expenses.
Inventory
Items a company intends for sale to customers.
Inventory Turnover Ratio
The number of times a firm sells its average inventory balance during a reporting period. It equals cost of goods sold divided by average inventory.
LIFO conformity rule
IRS rule requiring a company that uses LIFO for tax reporting to also use LIFO for financial reporting.
Last-In, First-Out Method
Inventory costing method that assumes the last units purchased (the last in) are the first ones sold (the first out)
LIFO Reserve
Additional amount of inventory a company would report if it used FIFO instead of LIFO
Lower-of-cost-or-market rule (LCM)
Rule where companies report inventory in the balance sheet at the lower of cost or market value, where market value equals replacement cost.
Net Income
Difference between all revenues and all expenses for the period.
Operating Income
Profitability from normal operations that equals gross profit less operating expenses.
Periodic Inventory System
Inventory system that periodically adjusts for purchases and sales of inventory at the end of the reporting period based on a physical count of inventory on hand.
Perpetual Inventory System
Inventory system that maintains a continual record of inventory purchased and sold.
Raw Materials
Components that will become part of the finished product but have not yet been used in production.
Replacement Cost
The cost to replace an inventory item in its identical form.
Specific Identification Method
Inventory costing method that matches or identifies each unit of inventory with its actual cost
Work-In Progress
Products that have started the production process but are not yet complete at the end of the period.
Accelerated depreciation method
Allocates a higher depreciation in the earlier years of the asset's life and lower depreciation in later years
Accumulated depreciation
A contra-asset account representing the total depreciation taken to date.
Activity-based method
Allocates an asset's cost based on its use
Addition
Occurs when a new major component is added to an existing asset
Amortization
Allocating the cost of an intangible asset over its service life
Asset Turnover
Net sales divided by average total assets, which measures the sales per dollar of assets invested
Big Bath
Recording all losses in one year to make a bad year even worse
Book Value
Equal to the original cost of the asset minus the current balance in accumulated depreciation
Capitalize
Recording an expenditure as an asset
Capitalized interest
Refers to interest costs recorded as assets rather than interest expense
Copyright
An exclusive right of protection given to the creator of a published work such as a song, film painting, photograph, book or computer software
Declinging-balance method
An accelerated depreciation method that records more depreciation n earlier years and less depreciation in later years.
Depletion
The process of recording expense for natural resources
Depreciation
Allocating the cost of a tangible asset over its service life
Franchise
Local outlets that pay for the exclusive right to use the franchisor company's name and to sell its products within a specified geographical area
Goodwill
The purchase price of a company less the fair value of the net assets acquired
Impairment
Occurs when the future cash flows (future benefits) generated for a long-term asset fall below its book value (cost minus AD)
Improvement
The cost of replacing a major component of an asset
Land improvements
Improvements to land such as paving, lighting, and landscaping that, unlike land itself, are subject to depreciation.
Materiality
An item large enough to influence an investor's or creditor's decision
Natural resources
Assets like oil, natural gas and timber that we can physically use up or deplete
Patent
An exclusive right to manufacture a product or to use a process
Profit Margin
Net income divided by net sales; indicates the earnings per dollar of sales
Repairs and maintenance
Expenses that maintain a given level of benefits in the period incurred
Residual Value
The amount the company expects to receive from selling the asset at the end of its service life; also referred to as salvage value
Return on assets
Net income divided by average total assets; measures the amount of net income generated for each dollar invested in assets
Service Life
How long the company expects to receive benefits from the asset before disposing of it; also referred to as useful life
Straight-line method
Allocates an equal amount of depreciation to each year of the asset's service life
Trademark
A word, slogan or symbol that distinctively identifies a company, product or service
About this deck
By: Matt Bannerman
Textbook: Financial Accounting
Created: 2010-11-01
Size: 53 flashcards
Views: 100
Textbook: Financial Accounting
Created: 2010-11-01
Size: 53 flashcards
Views: 100
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy
Kathy