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Exam 2 Flashcards

1
Q

Free On Board Shipping Point

A

Revenue recognized when shipped

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2
Q

FOB Destination Point

A

Revenue recognized when arrived to customer

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3
Q

Credit Card Discount

A

Discount of the CC Service Fee
(XR) account, decrease AR

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4
Q

Cash Discount: x/d, n/30

A

x = % if paid in d days, n = net remaining in 30 days

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5
Q

Cash Discount Account

A

Contra Revenue Account

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6
Q

Sales Return Account

A

Contra Revenue Account

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7
Q

Trade Discount

A

Reductions from the list price of an item

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8
Q

Volume Discount

A

Reduction in price based on quantity purchased

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9
Q

What two discounts are not included in the Net Sales calculations or contra revenue accounts?

A

Volume and Trade Discount

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10
Q

AFDA EB Equation 1

A

Credit Sales x Bad Debt Rate

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11
Q

AFDA EB Equation 2

A

AFDA BB + Bad Debt Expense

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12
Q

AFDA Account

A

Contra Asset

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13
Q

Is AFDA a permanent account?

A

Yes

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14
Q

Net AR

A

Amount expected to be collected

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15
Q

Net AR Equation

A

A/R EB - AFDA EB

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16
Q

Write offs

A

Used once determined company won’t pay their balance
Deduction of AFDA Account(-XA)

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17
Q

A/R Turnover Ratio

A

Net Sales / Average Net AR

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18
Q

Days to Collect AR

A

365/ AR Turnover Ratio

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19
Q

Cash Equivelants

A

Investments with maturity of f3 months or less
Ex: Checking/savings accounts and stocks

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20
Q

Bank Reconciliation

A

Making sure cash balance in Bank and General Ledger are equal

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21
Q

Bank Recon Adjusts for 6 things:

A

Outstanding Check, Deposits in Transit, Interest Earned, Bank Charge, Non Sufficient Funds Check, Errors

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22
Q

Perpetual Method

A

Tracks inventory automatically through barcode and scanning

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23
Q

Periodic Method

A

Tracks inventory manually over time

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24
Q

COGS Equation

A

BI + P = COGAS - EI = COGS

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25
BI:
Beginning Inventory
26
P:
Purchased inventory
27
COGAS:
Beginning Inventory + Purchased Inventory
28
EI:
COGAS - COGS
29
Net Profit Margin Equation
Net Sales - COGS
30
Inventory Turnover Ratio
COGS / Average Inventory
31
Days to Sell Inventory:
365/ Inventory Turnover
32
What are the 4 Inventory Costing Methods?
1. Specific Identification 2. Average Cost 3. FIFO 4. LIFO
33
Specific Identification Costing Method
multiple what is sold by the price that it is bought with -EI: Units remaining x Price of where the units remain
34
Average Cost Method
(COGAS/ Total Units available for sale ) x units sold EI: Average Cost * Ending Units
34
First In First Out
EI: Units Remaining * last cost
34
Last In First Out
EI: Units remaining * first cost
35
Who has the highest EI: LIFO or FIFO
FIFO
35
What has the highest NI: LIFO or FIFO
FIFO
35
Property definition
Land and land improvements Doesn't depreciate
36
Plant definition
buildings like warehouses, factories and offices
37
Equipment
Machinery, tools and furniture
38
Aquisition/Historical Cost
Purchase Price + any costs to get the asset ready for use
39
Depreciation
cost of using up assets to the periods in which those assets are used to generate revenue
40
Useful life definition
How long the company plans to utilize the asset in the course of the business
41
Salvage/residual Value
Amount the company expects to receive from the sale of the asset at the end of it's useful life
42
Depreciable Base Equation
Cost- Salvage Value
43
Net PP&E Equation
PP&E - Accumulated Depreciation
44
What are the 3 Depreciation Methods?
1. Straight Line Depreciation 2. Units of Production 3. Double Declining Balance
45
Straight Line Depreciation Equation
(Cost- Salvage Value) / Useful life
46
Units of Production Equation
((Cost - Salvage Value) / Estimated Units Produced ) * Units actually produced
47
Double Declining Balance Equation
BB: Book Value = Cost Rate: 2(1/useful life) Depreciation Expense: Book value * Rate Accumulated Depreciation: All current depreciation expense summed up EB: Ending book value: Cost - AD
48
Impairment
Decline in an assets value due to various indicators
49
what are the indicators of impairment? (4)
1. Physical Damage 2. Change in economic/ legal factors 3. Significant decline in market price 4. Significant increase in cost of asset
50
Impairment Loss Equation:
Book Value - Fair Value
51
Net Income regular account
Credit Loss = Debit Gain = Credit
52
Cash Collection Equation
Beginning AR + Credit Sales - Ending AR
53
Do net sales include write offs?
No
54
Gross Profit Equation
Sales Revenue - COGS
55
What are the 3 Contra Asset Accounts?
1. Accumulated Amortization 2. Accumulated Depreciation 3. AFDA
56
What is an example of a Contra Revenue Account
Discounts: Cash, Credit Card, Sales Return
57
Intangible Asset definition
nonphysical asset that has significant financial value
58
Examples of intangible asset
Patent, trademark, goodwill
59
What are intangible assets recorded at (value)
Historical Cost
60
Definite/ Limited Intangible Asset
An asset that will depreciate (amortization) on a straight line bases
61
Indefinite/ Useful Intangible Asset
An asset that will not depreciate(amortization) but is still tested for impairment yearly
62
Amortization
Depreciation but for Intangible assets
63
Goodwill definition
Excess of the purchase price of a business over the fair value of the net assets of the business purchased
64
Goodwill equation
Purchase price - Net assets
65
Net assets equation
Assets - Liabilities
66
Capitalized Costs
Non ordinary, large costs that can increase the useful life of an asset. Found on the balance sheet
67
Expense Cost
Ordinary, smaller everyday business costs that don't make an impact on the useful life of an asset. Found on the income statement
68
Fixed Asset Turnover Ratio
Net Sales/Average Net Fixed Assets
69
Net Sales Equation
Sales - Deductions (cash, credit card, returns and allowances)

Accounting (6 decks)

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