Question

Identify the term, principle or formula which corresponds to each of the following:

a. Unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends.

b. Creditors right to receive liquidated assets before stockholders.

c. Contra-asset account related to Accounts Receivable.

d. Cash flow activity types.

e. Beginning inventory + Purchases - Ending inventory

f. Journal entries prepared to transfer net income/loss and dividends to Retained Earnings.

g. Basis of accounting required by GAAP.

h. The time at which a loan must be repaid.

i. Refunds and price reductions given to customers after goods have been sold and found unsatisfactory.

j. Allocation of the cost of a fixed asset over its useful life.

k. Process by which journal entries are recorded in the appropriate T-account or ledger.

l. Policy or procedure established to safeguard assets and enhance accuracy of accounting records.

Answer 1

a. These are called prefrence shares.

b. Secured Creditors has this right.

c. This type of account is called allowance for doubtful accounts or bad debt reserve.

d. Cash flow are classified as operating, investing and financing activities.

Operating Activities - It includes cash activities related to net income.

Investing Activities - It includes cash activities related to noncurrent assets.

Financing Activities - It includes cash activities related to noncurrent libilities and owners' equity.

e. Cost of goods sold = Beginning inventory + Purchases - Ending inventory.

f. Debit retained earnings and credit the current liability dividends payable.

g. Accrual basis Accounting.

h. It is called Term.

j. It is called Depreciation.

k. After recording the transaction in journal , transfer them to the ledger and ledger is the book of final entry.

l. It is called Financial Accounting.