WGU D105 Intermediate Accounting

WGU D105 Intermediate Accounting 3 5.0 (2 reviews) Students also studied Terms in this set (89) Western Governors UniversityD 103 Save

WGU D105 OA #2

181 terms ljo1373Preview D105 OA1 Study Guide 34 terms lbalchaPreview D080 Pre-Assessment Questions an...70 terms JADAMS486Preview Interme 20 terms Hai Practice questions for this set Learn1 / 7Study using Learn Change from one generally accepted accounting principle to another Accounting PoliciesThe specific accounting principles and methods currently employed and considered most appropriate to present fairly the financial statements of an enterprise Amortized costThe acquisition cost adjusted for the amortization of discount or premium, if appropriate Choose an answer 1Change in accounting principle2Full Disclosure Principle 3Change in reporting entity4Change in estimate Don't know?

Asset-Liability ApproachThe approach recognizes and measures revenue based on changes in assets and liabilities Asset-Liability MethodA method used to account for income taxes that recognizes the amount of taxes payable or refundable for the current year and records deferred tax liabilities ans assets for the future tax consequences of events that have been recognized in the financial statements or tax returns Assurance-type WarrantyA warranty that the product meets the agreed-upon specifications in the contract at the time the product is sold Available-for-saleSecurities not classified as held-to-maturity or trading securities Bargain Purchase Option (BPO)A lease purchase option that allows the lessee to purchase the property for a price significantly lower than the underlying asset's expected fair value at the date the option becomes exercisable Bargain Renewal Option (BRO)A lease provision that allows the lessee to renew the lease for a period of time at a rent lower than the market rental price Bill-and-Hold Arrangementa contract under which an entity bills a customer for a product but the entity retains physical possession of the product until it is transferred to the customer at a point in time in the future Billings AccountUnder the percentage-of-completion method, when a company records a receivable from a sale, it must subtract the balance from this account from Construction in Process to avoid double-counting inventory.Change in accounting principleChange from one generally accepted accounting principle to another Changes in Accounting EstimatesA change that occurs as the result of new information or as additional experience is acquired CollectibilityThe risk that a customer will be unable to pay the amount of consideration in accordance with the contract.Completed Contract Methodthe accounting for long-term construction contracts where revenues and gross profit are recognized only when the contract is completed ConsigneeThe party that receives goods from a consignor under a consignment ConsignmentThe consignor ships the merchandise to the consignee, who is to act as an agent for the consignor in selling the merchandise ConsignorThe party that sends good to a consignee under consignment Consolidated Financial Statementsfinancial statements which disregard the distinction between separate legal entities and treat parent and subsidiary corporations as a single economic entity

Contract Assets(1) Unconditional rights to receive consideration because the company has satisfied its performance obligation with a customer, and (2) conditional rights to receive consideration because the company has satisfied one performance obligation but must satisfy another performance obligation in the contract before it can bill the customer.Contract LiabilityA company's obligation to transfer goods or services to a customer for which the company has received consideration from the customer. also Unearned Sales Revenue Contract Modificationoccurs when parties to a contract change the contract terms while it is ongoing ContributoryA pension plan where the employees bear part of the cost of the stated benefits or voluntarily make payments to increase their benefits Controlling interestwhen one corporation acquires a voting interest of more than 50% in another corporation cost-to-cost basisa method used under the percentage-of-completion method to estimate the extent of progress toward completion. Compares costs incurred to date with the most recent estimate of the total costs required to complete the contract Counterbalancing errorserrors that will be offset or corrected over two periods Cumulative effectThe difference in prior years' income between the newly adopted and prior accounting method.Current Tax ExpenseThe amount of income taxes payable (or refundable) for a year as determined by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues for that year Debt Securitiesinstruments representing a creditor relationship with an enterprise and including US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments Deductible Temporary DifferenceTemporary differences that result in deductible amounts in future years when recovering or settling the related asset or liability, respectively.Deferred Tax Assetthe deferred tax consequences attributable to deductible temporary differences and carryforwards; PAST DEDUCTIONS/CREDITS used to defray future tax bills deferred tax expensethe increase in the deferred tax liability balance from the beginning to the end of the accounting period Deferred Tax Liabilitythe deferred tax consequences attributable to taxable temporary differences; AMOUNT of tax to be PAID IN THE FUTURE Defined Benefit Plana pension plan which defines the benefits that the employee will receive at the time of retirement

Defined Contribution Plana pension plan where the employer agrees to contribute to a pension trust a certain sum each period based on a formula Effective Tax Ratetotal income tax expense for the period divided by pretax financial income Equity MethodA method of valuing securities whereby the investment's carrying amount is periodically increased (decreased) by the investor's proportionate share of the earnings (losses) of the investee and decreased by all dividends received by the investor from the investee.Equity SecuritiesSecurities representing ownership interest in another corporation, common or preferred stock Errors in Financial statementsErrors occur as a result of mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time financial statements were prepared.Fair ValueThe amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale.Finance LeaseA lease that transfers control (ownership) of the underlying asset to a lessee; the lessee, therefore, recognizes interest expense on the lease liability over the life of the lease using the effective-interest method and records amortization expense onthe right-to-use asset generally on straight-line basis Financing ActivitiesActivities that involve liability and equity and include (a) obtaining cash from creditors and repaying the amounts borrowed and (b) obtaining capital from owners and providing them with a return on, and a return of, their investment Full Disclosure PrincipleAccounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users. (Financial reporting of any financial facts significant enough to influence the judgment of an informed reader) Guaranteed Residual ValueThe lessee has an obligation to not only return the leased asset at the end of the lease term but also to guarantee that the residual value will be a certain amount Held-to-MaturitySecurities that the enterprise has the positive intent and ability to hold to maturity Holding Gain or Lossthe net change in the fair value of a security from one period to another, exclusive of dividend or interest revenue recognized but not received Implicit Interest RateThe discount rate that, at the commencement of the lease, causes the aggregate present value of the lease payments and unguaranteed residual value to be equal to the fair value of the leased asset Incremental Borrowing RateThe rate of interest the lessee would have to pay on a similar lease or the rate that, at commencement of the lease, the lessee would incur to borrow over a similar term the funds necessary to purchase the asset