Everything Flashcards
Sales return journal entry
Dr. sales returns and allowances
Cr. accounts receivable
Dr. inventory
Cr. cost of sales
Faulty goods journal entry
Dr. sales returns and allowances
Cr. accounts receivable
Dr. inventory write-down
Cr. cost of sales
Unreconciled items on bank statement
Dishonoured cheques and direct deposits and recording errors
5 step framework
- Identify the contract with a customer
- Identify the performance obligation
- Determine the transaction price
- Allocate the transaction price to the
performance obligation - Recognise revenue when the entity satisfies
the performance obligation (the G&S have
been exchanged) and probability of
payment
Unreconciled items on our books
Outstanding deposits and unpresented cheques
Credit risk ratio
Allowance for doubtful debts / Accounts receivable
Receivables turnover
Net credit sales / average net receivables
Average collection period
365 / receivables turnover
Testing for impairment
Impaired if CA > RA (lower of fair value and value in use)
Breakage revenue
Breakage revenue = gift card used value / gift card expected value to be used x total breakage revenue
Notes payable
done like loan. Cr cash at end by loan amount + interest
Discounted bank bill journal entry
Dr. cash
discount on bank bill payable
Cr. bank bill payable
Dr. bank bill payable
interest expense
Cr. discount on bank bill payable
bank
Debenture journal entry
done like loan. but when done earlier, dr. loss on redemption (e.g. 3% of total debenture)
Provision journal entry
Dr. expense
Cr. provision
Working capital
CA - CL
Current ratio
Current assets / current liabilities
Quick ratio
Cash + marketable securities + net receivables / current liabilities
or
CA - inventory
D/A ratio
Total liabilities / total assets
Interest coverage ratio (times interest earned)
EBIT / interest expense
Quality of income ratio
Cash flow from operating activities / net income
Major operating cash flow line items
Cash receipts from customers
Cash receipts from interest or dividends
Cash paid to suppliers
Cash paid to employees
Cash paid for operating expenses
Cash paid for income tax
Cash payments for interest
Current cash debt coverage
Net cash from operating activities / average current liabilities
Cash debt coverage
net cash from operating activities / average total liabilities
Du Pont levels
Level 1: ROA; ROE
Level 2: Profit margin; asset turnover; leverage ratio
Level 3: the profit margin and asset turnover can be analysed further:
Receivables turnover; inventory turnover;
selling expenses to sales ratio
Cash conversion cycle
negative is good
(Days receivables + days inventory) - days payables
