BDAs

Question 1

What is accrued revenue/revenue receivable, what type of account is it and what is the journal entry?

Answer 1

Revenue that has been earned in the accounting period, but not received, asset, debit revenue receivable and credit revenue

Question 2

What is an accrued expense, type of account and journal entry?

Answer 2

An expense that has been incurred in the accounting period, but not paid or charged, liability, debit expense, credit liability payable

Question 3

What question do we ask ourselves with prepaids?

Answer 3

WHICH METHOD DID THEY USE? Liability/Revenue for prepaid revenue or Asset/Expense for prepaid expense

Question 4

What types of accounts are prepaid revenue and prepaid expense?

Answer 4

Liability and expense, respectively

Question 5

Depreciation is

Answer 5

The consumption of the economic benefits of a non-current asset

Question 6

Residual value is also known as

Answer 6

Scrap value

Question 7

How do we calculate straight line depreciation?

Answer 7

(cost-scrapvalue)/usefullife = depreciation p.a.

Question 8

How do we calculate reducing balance depreciation rate?

Answer 8

1-(scrapvalue/cost)^(1/n) …. (cost-acc.dep)xrate=dep.p.a.

Question 9

How do we calculate unit cost?

Answer 9

cost-scrapbalue/estimatednumberofunitsoverlifeofasset – [multiply this by actual to get dep.]

Question 10

Differentiate between bad and doubtful debts

Answer 10

A bad debt is one you will never get back, a doubtful debt is what you think is bad but hasn’t been confirmed yet.

Question 11

What are the steps in estimating doubtful debts expense?

Answer 11

1. Determine the current balance in the allowance account after adjusting for any transactions that affect it (e.g. bad debts)
2. Determine the balance we want in the allowance account
3. Find the adjustment that will change the current balance to the balance we want