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S
Corporation
Limited to 100 ShareholdersLimited LiabilityUnlimited LifeIndividually rated taxes TERM 2
C
Corporation
DEFINITION 2 Unlimited owners called ShareholdersLimited LiabilityUnlimited LifeCorporately rated taxes - double taxed on income and as owners on dividends TERM 3
Limited Liability Partnership
DEFINITION 3 At least 2 ownersUnlimited but for general debts of the business but partners are protected from claims of negligence or malpractice committed by another partnerLimited Life - end upon death or owners or owners become incapacitatedIndividually rated taxes TERM 4
Limited Partnership
DEFINITION 4 At least 2 ownersUnlimited liability for general partners, limited liability for limited partnersLimited life - end upon death of owners or owners become incapacitated TERM 5
Limited Liability Company
DEFINITION 5 Owners are called membersLimited LiabilityUnlimited LifeIndividually rated taxes
Sole Proprietorship
One ownerUnlimited LiabilityLimited life - end upon death of owner or owner becomes incapacitatedIndividually rated taxes TERM 7
General Partnership
DEFINITION 7 At least 2 ownersUnlimited LiabilityLimited life - end upon death of owners or owners become incapacitatedIndividually rated taxes TERM 8
Authorized Stock
DEFINITION 8 the number of shares that a corporation's charter allows it to sell is referred to as: TERM 9
Common Stock
DEFINITION 9 When all of the authorized shares have the same rights and characteristics, the stock is called; TERM 10
Par Value of Stock
DEFINITION 10 Value assigned per share of stock by the corporation charter
Preferred Stock (non-cumulative)
Holders of this type of preferred stock lose any dividends that are declared in the current year TERM 17
Bond Discount
DEFINITION 17 Contract rate is below the Market Rate TERM 18
Bond Premium
DEFINITION 18 Contract rate is above the Market rate TERM 19
Par Value of Bonds
DEFINITION 19 Contract rate is equal to the market rate TERM 20
Advantages of Bonds
DEFINITION 20
- Bonds do not affect owners' control2. Interest on bonds is tax deductible3. Bonds can increase return on equity 4. It allows firms to trade on the equity
Disadvantages of Bonds
- Bonds require payment of periodic interest2. Bonds require payment of par value at maturity3. Bonds can decrease return on equity4. Bond payments can be burdensome when income and cash flow are low TERM 22
Short-term investments
DEFINITION 22 Are securities that management intends to convert or trade in less than a year TERM 23
Long-term investments
DEFINITION 23 Investments in debt securities and equity securities that will be held for longer than one year TERM 24
Trading Investment
DEFINITION 24 Debt and noninfluential equity securities that are actively tradedFair Value Reporting TERM 25
Held-to-maturity
DEFINITION 25 Debt securities intended to be held until maturityAmortized cost reporting
Indirect labor costs
refers to the costs of workers who assist in or supervise the manufacturing process TERM 32
Indirect materials
DEFINITION 32 are materials issued in manufacturing and become part of the final product, but they are not clearly identifies with specific product units TERM 33
Factory
Overhead
DEFINITION 33 (manufacturing overhead) consists of all manufacturing costs that are not direct materials or direct labor TERM 34
Conversion costs
DEFINITION 34 expenditures incurred in the process of converting raw materials to finished goods (Direct labor and factory overhead) TERM 35
Prime Costs
DEFINITION 35 expenditures directly associated with the manufacture of finished goods (Direct materials and Direct labor)
Period costs
(expenses) are non-production costs and are usually more associated with activities linked to a time period than with completed products (General, administrative, and selling costs) TERM 37
Product Costs
DEFINITION 37 are those production costs necessary to create a product and consist of: direct materials, direct labor, and factory overhead(Direct materials and direct labor) TERM 38
Raw Materials Inventory
DEFINITION 38 refers to the goods a company acquires to use in making products TERM 39
Goods in process inventory
DEFINITION 39 it consists of products in the process of being manufactured but not yet complete TERM 40
Finished goods inventory
DEFINITION 40 (owned by manufacturer) which consists of completed products ready for sale
Predetermined overhead
rate
used during the period to allocate estimated overhead to jobs (estimated overhead costs) / (estimated activity base) TERM 47
Overapplied overhead
DEFINITION 47 more overhead is applied than is actually incurred, the resulting credit balance in the factory overhead TERM 48
Underapplied overhead
rate
DEFINITION 48 less overhead is applied than is actually incurred, the remaining debit balance in factory overhead account TERM 49
Cost of Goods
Manufactured
DEFINITION 49 is the total cost of making and finished products in the period (cost of goods sold) TERM 50
Equivalent Units of Production (EUP)
DEFINITION 50 refers to the number of units that could have been started and completed given the costs incurred during the period
Benefits of Budgeting
- Enhances coordination so that activities of all units contribute to meeting the company's overall goals2. Promotes analysis and a focus on the future3. Communicates management plans throughout the organization4. Motivates employees through participation in the budgeting process and the establishment of attainable goals5. Converts long-term strategic plans into short- term financial plans6. Provides a benchmark for evaluation performance TERM 52
Break-even Point
DEFINITION 52 is the sales level at point which a compnay neither eanrs a profit nor incurs a loss TERM 53
Budgeting
DEFINITION 53 the process of planning future business actions and expressing them as formal plans TERM 54
Rolling Budget
DEFINITION 54 is a twelve-month budget that rolls forward one month as the current month is completes TERM 55
Budget Committee Responsibility
DEFINITION 55 the budget committee responsibility for budgeting policies and for coordination the efforts of all participants in the budgeting process
