Deck 21 Flashcards
Purchase method vs consumption method of inventory (Gov’t accounting)
Purchase method: record asset as expenditure when purchased; Consumption method: record asset as a current asset when purchased
How is debt recorded under governmental funds?
“Other financing sources”
Changes in values of derivatives used for hedging activities are reported as either:
Deferred outflows or inflows of resources
Deferred outflows vs deferred inflows
Outflow: Consumption of net assets and have a positive impact on net position; Inflow: Acquisition of net assets, negative impact on net position
Debt covenants should be classified as what kind of fund balance?
Restricted
Assets associated with unavailable revenues should be recorded by crediting:
Deferred inflow of resources
Items that are “unusual” and/or infrequent should be reported where?
Separately as a component of income from continuing operations
Losses from discontinued operations should be reported in what period?
The interim period incurred
When is revenue recognized for a generic product?
Recognize revenue based on shipments (recognize revenue based on production for custom products)
Under the installment method, installment receivables =
Deferred gross profit/gross profit percentage
Installment receivables =
Sales minus cash collections (gross profit/GP %)
Under the installment method, cash collections =
Gross profit/GP percentage
Under current cost accounting, holding gain on inventory =
Excess replacement cost over original purchase price
Royalty expense for the year equals what amount
The amount “earned”
Ending royalty receivable =
beg. balance + royalty revenue - collections
Rule for capitalization of interest (F4)
Capitalize the lower amount of avoidable interest or actual interest
Avoidable interest =
Average accumulated expenditures x interest rate on specific borrowing
FOB destination
Title passes when received by the buyer. Packaging, shipping, and handling are all costs of the seller
Ending inventory under the weighted average method =
weighted average cost per unit * (total units - units sold)
Weighted average cost per unit =
Total cost/total units purchased
