Exam 1 Flashcards
Calculate Debt Balance
(Total Liabilities) / (Total Assets)
Calculate Current Ratio
(Total Current Assets) / (Total Current Liabilities)
Calculate Working Capital
(Total Current Assets) - (Total Current Liabilities)
sale of plant assets
investing
buying and selling own stock
f
Steps for completing a statement of cash flow
- Read problem and especially take note of the “other info” section
- Record transaction for any additional information (i.e. equipment)
- Post revs and exps to the appropriate t-accounts
- Find the other side of each rev and exp and label each one
- Close all revs and exps to income summary
- Close income summary to retained earnings
- Reconcile all balance sheet accounts
collections from customers
Operating
collecting interest
operating
receiving dividends
operating
payments to suppliers
operating
payments to employees
operating
payments of taxes
operating
payments of interest
operating
sale of investments
investing
cash receipt of loan principal
investing
Acquisition of plant assets
investing
acquisition of land
i
acquisition of other investments
i
lending money
i
borrowing money
f
payment of dividends
f
payment of principal on debts
f
3 things you must do to recognize revenue
- seller has to put forth substantial effort
- Implied or explicit agreement
- The price needs to be known
Purpose of adjusting entries
they allow us to record revenues and expenses in the proper period as well as modify the value of related assets and liabilities
Matching concept
expenses should be recorded in the same time period that any revenue associated with those expenses is generated
What group creates accounting standards?
FASB
When do you recognize rev and exp in cash accounting?
when cash has come or gone; same time as cash flow
When do you recognize rev and exp in accrual accounting?
When it is earned (economic performance)
