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72 Cards in this Set
- Front
- Back
Effect of payroll deductions on the financial statements.
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The amounts withheld represents liabilities for the company. It reduces the companies assets.Liabilities are increased and owner's equity is decreased
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Reporting expenditure process events-
Expenses Incurred |
Income Statement
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Reporting expenditure process events-Cash paid for operating activities
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statement of cash flows
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Reporting expenditure process events-assets and liabilities resulting from operating activities
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balance sheet
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Estimating cash paid for inventory
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beginning balance
+ net purchase on account = inventory available for sale or use -cost of goods sold =ending inventory |
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pricing strategies
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1. customers (customer perspective)
2. competitors (learning and growth perspective) 3. legal and social issues (learning and growth perspective) 4. cost (internal perspective) |
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markup
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an additional amount to the cost of their products and services.
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selling margin
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selling price-cost
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Cost-based pricing policy
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Selling price=cost+(cost*markup percentage)
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selling margin percentage
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selling margin/ selling price
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price fixing
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group of companies agree to limit supply and charge identical prices for their goods and services.
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price gouging
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price of setting an excessively high price with the intent of reaping short term excessive profits
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penetration pricing
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setting an initial selling price low in an attempt to gain market share
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predatory pricing
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practice of selling products below cost in an attempt to drive out the competition, control the market, and then raise the price
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dumping
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company sells it's product below cost in foreign countires
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Skimming pricing
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setting an initial selling price high in an attempt to make early profits
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life-cycle pricing
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a pricing strategy based on the estimated total cost of product over it's life
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target pricing
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a pricing strategy where the company first estimates the selling price and then subtracts the required markup to determine target cost
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Reasons to maintain inventory
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1. to meet customer demand
2. to smooth production scheduling 3. to take advantage of quantity discounts 4. to hedge against price increases |
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Reasons not to maintain inventory
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1. cost
2. Hides problems |
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ordering costs
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costs incurred to place one additional order for inventory; costs that vary with the number of orders placed and received
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carrying costs
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costs that vary with the number of units carried in inventory
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reorder point
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inventory level that when reached indicates the need to place an order for additional inventory
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EOQ Economic order quantity
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minimizes short-term ordering and carrying costs
1. there is no seasonal fluctuation throughout the year 2. lead time is constant throughout the year, regardless of supplier 3. The entire order is received at the same time 4. No quantity discounts are available 5. Inventory size is not limited; orders of any size are possible 6. Batch-related, product sustaining, and facility-sustainng storage costs are irrelevant ;is a short term model |
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daily demand
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annual demand/#of business days
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reorder point formula
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daily demand * lead time +safety stock=reorder point
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lead time
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number of days elapsing from the time the order is placed to when it's received
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Just-in-time -Jit model
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long-run model based on the principle that inventory should arrive just as needed for production in the quantities needed
the sales estimate must be accurate so the production can be completed when customers demand the product must be completed with zero defects strong relationship with suppliers good relationship with employers |
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eorder point when company maintains safety stock
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(daily demand*lead time)+safety stock
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jit model
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eliminates distruptions in production
reduces or eliminates nonvalue-added activities minimizing inventory |
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bonus rate
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percentage the bonus will pay
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bonus base
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form of income the bonus rate is applied to
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bonus based on income bef income taxes
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bonus=(income bef bonus-bonus) * bonus rate
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bonus based on net income
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bonus=(income bef bonus and income taxes-bonus-income taxes)*bonus rate
income taxes=(income bef bonus and income taxes-bonus)*tax rate |
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piece-rate pay
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employee receives compensation based on the number of items completed.
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commission pay
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percentage of revenue generated
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hourly pay
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paid a certain number per hour
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salary pay
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compensation based on a fixed amount per period
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gross pay
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full amount employee earns
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net pay
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total earned after withholdings
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budgetary slack
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difference b/t what a person with input into the budgeting process chooses as an estimate of revenues or expenses and what is actually a realistic estimate; deliberately induced bias
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mandated budgeting
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op-down budgeting, the budget is prepared by upper management based on predetermined standards
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participatory budgeting
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bottom-up budgeting, the budget is coordinated by upper management based on input from lower level employees
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incremental budgeting
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strategy whereby the company uses the prior periods budget as a starting point in preparing the periods budget
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zero-based budgeting
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company begins each budget period with a zero budget, requires consideration of every activity undertaken by the department or segment
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master budget
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compilation of all the budgets and shedules prepared planning for the revenue, conversion and expenditure process
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Revenue process planning
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1. sales budget
2.cash reciepts shedule 3. accounts recievale shedule 4. marketing and distribution budget |
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Conversion process planning
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1. production budget
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Expenditure process planning
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1. direct materials purchase budget
2. direct labor and overhead budget 3. administrative budget 4.cash disbursement schedule 5.accounts payable schedule |
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planning budget schedules
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1. sales budget
2. cash receipts schedule 3. accounts receivable schedule 4. marketing and distribution budget |
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Budgeted financial Statements
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1. Finished Goods schedule
2. cost of goods sold shedule 3.income statement 4.statement of cash flows 5. balance sheet |
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sales budget
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shows the expected sales for the period in both physical quantity and financial dollar amounts for a particular product line, geographic area, or sales manager
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cash receipts schedule
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shows anticipated cash collections from customers for the period
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accounts recievalbe shedule
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indicates the changes expected in the balance of accounts receivable during the budget period
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Calculating ending balance of accounts receivable
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+Credit sales during the month
=total amount due from customers -cash reciepts from credit customers during the month -cash sale discounts taken by customers during the month =ending balance of accounts receivable |
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production budget
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uses information from the sales budget plus the company's desired ending inventory level to determine the quantity of finished goods to produce each period
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direct materials purchases budget
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reflects the expected cost of direct material purchases during the period
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cash disbursement shedule
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expected cash outflows during the period
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Estimated balance in accounts payable is determined by.........
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beginning balance of accounts payable
+purchase on account during the month =total amount owed to suppliers -cash paid to suppliers on account during the month -cash purchase discounts for the month =ending balance of accounts payable |
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accounts payable schedule
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indicates the expected changes in the balance of accounts pauable during the period
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owners equity increase, owners equity decrease
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common stock is issued in exchange for perfected stock
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Trial balance
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a listing of all the general ledger account balances to ensure that debits equal credits
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general ledger
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collection of specific asset, liability, and owner's equity from the chart of accounts
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adjusting entry
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internal entry, required to adjust the accounts for internal events prior to preparing financial statements
account balance has been sated properly and expense has been recognized |
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revenue accrual
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recorder when revenues are earned in one accounting period and payment is recieved in later periods
increase assets, increase revenue(inc owner's equity) |
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revenue defferal
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company has been paid in advance by a client for services to be performed in the future, revenue recognition has been deffered
decrease liabilities, increase revenue inc owners equity |
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expense accrual
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expenses are incurred in one acocunting period and payment is made in later periods
increase liabilites, increase expense, decrease owners equity |
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expense defferal
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company uses previously purchased assets in an attempt to generate revenue in future periods
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closing entry
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prepared to close income statement accounts
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permanent account
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asset, liability, owners equity whose balance is carried over from year to year
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Income statement to statement of retained earnings
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net income transfers from income statement to statement of retained earnings
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Statement of Retained earnings to balance sheet
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The ending balance of statement of retained earnings transfers as retained earnings to balance sheet
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