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會計學 I ACCT 215 > Chapter 5/6/7/9 > Flashcards

Chapter 5/6/7/9 Flashcards

1
Q

Merchandising Companies

A

Retailers, Wholesalers, Manufacturers

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2
Q

Inventory is classified into 3 categories by manufacturing companies

A
  1. Raw materials
  2. Work in process
  3. Finished goods
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3
Q

Operating Cycle

A

Period from cash is spent to buy inventory/provide service to cash is collected

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4
Q

Net Income

A

Sales - (CoGS & Expenses) - Income Tax
淨利

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5
Q

Gross profit

A

Sales - Cost of Goods Sold
毛利
=Gross Margin
=Merchandising Profit

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6
Q

Profit Margin

A

Net Income / Sales (%)
淨利率
(=Sales-Expenses/Sales)

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7
Q

Gross Profit Margin

A

Gross Profit / Sales (%)
毛利率
=[Sales-CoGS]/Sales

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8
Q

Profitability Measures

A

Gross Profit Margin & Profit Margin

Generally low-turnover businesses have higher profitability

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9
Q

Steps to determine Cost of Goods Sold in Periodic Inventory System

A
  1. Determine Beginning Inventory
  2. Determine Cost of Goods Available for Sale
    (= Beginning Inventory + CoG Purchased)
  3. Determine Cost of Ending Inventory
    (Physical count)
  4. Determine Cost of Goods Sold
    (= CoGAfS - Ending Inventory)

CoGS is a residual number

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10
Q

Cost of Goods Available for Sale

A

Cost of Goods Purchased
+ Beginning Inventory
= Cost of Goods Sold
+ Ending Inventory

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11
Q

Record entries of Sales in perpetual inventory

A

Return Rate = 5%

Sales
Dr Cash or A/R (100%)
Cr Sales (95%)
Cr Refund Liability (5%)

CoGS
Dr CoGS (95%)
Dr Est. Inv. Returns (5%)
Cr Inventory (100%)

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12
Q

Record entries of Returns in perpetual inventory

A

Sales
Dr Refund Liability
Cr Cash or A/R

CoGS
Dr Inventory
or CoGS (if not resalable)
Cr Est. Inv. Returns

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13
Q

Accounts of Refund Liability / Estimated Inventory Returns

A

Liability / Asset

(both current)

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14
Q

Explain Purchase Discount
2/10 n/30

A

2% Discount (Cr Inv.) =
if payment made in 10 days

Due in 30 days anyway

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15
Q

FOB Shipping Point

A

Title transferred when leaving the seller. (Inventory +/-)

Buyer pays freight costs, record as Inventory.

Buyer is responsible for loss/damage in shipping.

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16
Q

FOB Destination

A

Title transferred when reaching the Buyer. (Inventory +/-)

Seller pays freight costs, record as Operating Expense (Freight Out).

Seller is responsible for loss/damage in shipping.

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17
Q

Perpetual / Periodic Inventory

A

Entries for every sale / Entries for every period

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18
Q

(IFRS) Expenses are classified by

A
  1. Nature
    E.g. Salaries, Depreciation, Advertising, etc.
  2. Function
    E.g. CoGS, Admin Expenses, Selling Expenses, etc.
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19
Q

Entries of outflow payment of
$1500 in 10 days under 2/10 net 30

A

Dr Accounts Payable 1500
Cr Inventory 30
Cr Cash 1470

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20
Q

Categories of Inventory Expenses

A
  1. Cost of Goods Sold
  2. Operating Expenses
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21
Q

When costs rising,
compare FIFO & WAC
in CoGS / Inventory & N.I.

A

CoGS
FIFO < WAC

Inventory & N.I.
FIFO > WAC

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22
Q

If Inventory is Understated
(Inventory Errors)
Effects of
CoGS / Gross Profit / Net Income / Retained Earnings

A

CoGS Overstated /
G. Profit Understated /
Net Inc. Understated /
R/E Understated

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23
Q

4 Steps of Multiple-Step Statement of Income

A
  1. Gross Profit 毛利
    = Sales - CoGS
  2. Income from Operations 營業利益
    = Gross Profit - Operating Exp
  3. Income before Income Tax 稅前淨利
    = Income from Operations + Non-Operating (Rev - Exp)
  4. Net Income (稅後)淨利
    = Income before I/T - I/T Exp
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24
Q

Non-Operating Activities

A

Rev / Exp not related to company’s main operations

Non-recurring, not sustainable, less predictive value

E.g. Interest income & expense / Rent income / Investment income / Foreign exchange gain or loss

25
Q

The Income including Net Income & unrealized gain/loss on investments or foreign currency translation

A

Comprehensive Income

26
Q

The Income including
unrealized gain/loss on investments or foreign currency translation

A

Other Comprehensive Income
(OCI)

27
Q

Net Realizable Value (NRV)

A

Future economic benefit that company will receive when selling inventory goods.

NRV = Price - Cost to sell

(可變現淨值)

28
Q

Inventory Cost > NRZ
(Net Realizable Value)

Debit / Credit ?
(A.J.E.)

A

Dr CoGS
Cr Inventory

29
Q

Consigned Goods

A

寄售商品

Inventory held by Consignee to sell
on behalf of Consignor (owner)

Consignor pays commission to Consignee.

Record in Consignor’s inventory

30
Q

How to choose between FIFO & WAC cost formula?

A
  1. Closest to physical flow of goods
  2. Close to inventory’s recent cost
  3. Same cost formula for all inventories of a similar nature & use
31
Q

Cost Formulas of Inventory

A
  1. SI: Specific Identification
    (closest to actual cost)
  2. FIFO: First-in, First-out
  3. WAC: Weighted Average Cost
32
Q

Inventory Turnover Ratio

A

CoGS / Average Inventory
([Beginning Inv + Ending Inv] / 2)

存貨周轉率
=庫存在一個會計週期內可賣完次數
Liquidity Ratio

33
Q

Days in Inventory Ratio

A

365 / Inventory Turnover Ratio
= 365 / (CoGS / Average Total Inventory)

存貨周轉天數
=庫存可在幾天賣完
Liquidity Ratio

34
Q

Impairment Loss

Calculation & J.E.

A

= Carrying Amount - Fair Value
= [Purchase - Accum. Depreciation] - Fair Value

Dr. Impairment Loss
Cr. Accumulated Depreciation - ___

Operating Expense

35
Q

Criteria to determine Capitalized / Operating expensed

A
  1. Frequency of the Cost :
    1-time / recurring
  2. Benefit Period : Asset’s lifetime / 1-year
36
Q

Land’s Capitalized Expenses

A
  1. Purchase Price
  2. Closing costs: Survey / Title Search / Legal fee
  3. Preparing: Clearing / Draining / Excavating / Grading
  4. Demolish/Remove unwanted bldg/structure - $ from salvaged materials
37
Q

Land Improvements’ Capitalized Expenses

A

Driveways / Sidewalks / Fences / Lighting / Sprinklers / Parking Lots

38
Q

Buildings’ Capitalized Expenses

A
  1. Purchase Price
  2. Closing costs: Legal fee
  3. Construct: Architect fee / Bldg Permit / Excavation / Interest costs until ready for use
  4. Ready for use: Remodelling / Replacing or Repairing Roof, Floor, Wiring, Plumbing..
39
Q

Account of

Installation of Power Charging Station for Vehicle

A

Equipment

40
Q

Account of

Replacing batteries of E-Powered Vehicles

A

Vehicles

41
Q

Equipment’s Capitalized Expenses

A
  1. Purchase Price
  2. Taxes & Tariffs
  3. Freight & Transit Insurance
  4. Install, Test & Assemble
  5. Estimate cost of Dismantling / Removing / Restoring at end of useful life (retire)
42
Q

Capitalize Expenditures

A
  1. Get equipment ready for its intended use
  2. Benefit equipment > 1 yr
  3. Increase Life / Productivity / Efficiency
  4. Normally significant & infrequently
43
Q

Operating Expenditures

A
  1. Benefit current period only
  2. Maintain normal operating condition and often recur
  3. E.g. Repainting bldg / Replacing tires / Repairs & Maintenance Expense
44
Q

5 components of good Internal Control Systems

A
  1. Control Environment
    Integrity is valued; “Setting the tone at the top”
  2. Risk Assessment
    Mitigate risks/Reduce impact. Influenced by size & nature of the company
  3. Control Activities
    Policies/Procedures in 5 activities
  4. Information & Communication
    Info for internal/external users
  5. Monitoring Activities
    Adequacy is monitored periodically

CRCIM

45
Q

Which Control Activity
indicates that the most effective when only 1 employee (level) is authorized to perform a specific task?

A

Assignment of Responsibility

Ex.1 Need record employee name/number when same level employees performing the same task

Ex.2 Each cashier has respective cash drawer

46
Q

Which Control Activity
indicates that tasks should be assigned to different individuals?

A

Segregation of Duties

Small businesses should perform more control activities to prevent fraud from less employees

Ex. Segregate responsibilities of authorization, receiving and recording $ to individuals

47
Q

Which Control Activity
provides evidence of occurred transactions?

A

Documentation

Ex. Shipping documents, sales invoices, prenumbered cheques

Ex. Signed document involves Documentation & Assignment of Responsibility

48
Q

Which Control Activity
is used to safeguard assets and enhance accuracy and reliability of accounting records?

A

Physical Controls

Including paying ALL payments with cheques and EFT

49
Q

Which Control Activity
involves (internal/external) review of data prepared by employees, and comparisons between documents?

A

Review & Reconciliation

Internal Reviews are useful to keep assets from being stolen.

Large companies employs internal auditors for internal reviews.

External auditors are pro accountants hired to report if the company’s financial statements are fairly presented.

50
Q

Limitations of Internal Control

A
  1. Cost/Benefit Considerations
    Benefit should > Cost
  2. Human Error
  3. Collusion
  4. Management Override
51
Q

3 Factors in Fraud Triangle

A

Opportunity / Financial Pressure / Rationalization

52
Q

Postdated / Stale-dated / Returned Check = Cash?

A

False

53
Q

EFT (Electronic Funds Transfer) for internal control and fraud

A

Better internal control but NOT eliminating fraud

54
Q

Just-in-Time Approach

A

Avoid large quantities of inventory by ordering small quantities frequently, can improve Inventory Turnover Ratio

55
Q

Entries recording of

NRV Writedown / Shrinkage

A

Dr. CoGS
Cr. Inventory

56
Q

Return on Assets ratio

A

= Net Income /
Average Total Assets
([Beginning+Ending Assets]/2)
(%)

Efficiency of Net Income is generated from each dollar of Assets

Profit Margin x Asset T/O
= Return on Assets

57
Q

Asset Turnover ratio

A

= Sales / Average Total Assets
([Beginning+Ending Assets]/2)
(Times)

Efficiency of Sales generated by each dollar of Assets

Profit Margin x Asset T/O
= Return on Assets

58
Q

Expenditure account of
New truck’s license fee

A

Repairs & Maintenance Exp

59
Q

CRA requires ___ to determine depreciation for income tax purpose
(Canada Revenue Agency)

A

Capital Cost Allowance (CCA)

會計學 I ACCT 215 (5 decks)

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