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ACCT 200 > EXAM II > Flashcards

EXAM II Flashcards

1
Q

Lower of Cost or Market (LCM)

A

a conservative approach to valuing and reporting inventory

Use inventory account

if the market is higher, don’t need to adjust

if the market is lower, need to adjust

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2
Q

Depletion

A

Natural resources

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3
Q

Contingent Liabilities

A

A potential liability that may occur depending on the outcome of a certain event

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4
Q

Factors that affect the market price of bonds

A

Length of time until maturity

Market Rate of interest

Issuing companies credit ratings

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5
Q

what time of account is an allowance for bad debt, and what is its normal balance?

A

Contra asset account

(-/+) normal balance on credit side

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6
Q

Bad Debt Expense’s buddy account is

A

Allowance for bad debt

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7
Q

The formula for Gross Margin

A

SALES - COGS

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8
Q

Gross Margin Method

A
  • used to get ending inventory*
    1. beg inv + purchases = GAS
    2. find cogs - gm% = (sales-cogs)/sales
    3. find ending inventory by GAS-COGS
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9
Q

Present Value of an Annuity Formula

A

PVA = PMT x PVA (n,i)

n = periods

i = interest rate

PAYMENT = ANNUITY

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10
Q

Future Value of Lump Sum Formula

A

FV = PV x FV (n,i)

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11
Q

Straight Line Depreciation Formula

A

(historical value - salvage value)/(useful life)

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12
Q

Gain or Loss on Sale Entries

A

Gain = credit

Loss = debit

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13
Q

Net Book Value

A

Historical value - depreciation

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14
Q

Periodic Inventory System

A

Inventory is not tracked on a day to day basis. COGS is determined at the end of the accounting period by doing a physical count.

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15
Q

Perpetual Inventory System

A

Records of inventory are kept continulously. COGS is determined each time a sale occurs.

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16
Q

Sales returns and allowances

A

Debit sales returns and allowances

Credit accounts recievable

Debit Invetory

Credit COGS

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17
Q

FIFO

A

First In First Out

the first costs into inventory are the first out to cost of goods sold. Ending inventory reflects the most recent units purchased

Has the highest net income

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18
Q

LIFO

A

Last In First Out

The last costs into inventory are the first out to COGS, ending inventory reflects the oldest inventory unit costs

Has lower taxes because more expensive

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19
Q

Weighted Average

A

Average of all invetory items available for sale

GAS/Number of units

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20
Q

Inventory turnover Equation

A

COGS/Average inventory

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21
Q

Average Inventory Equation

A

(beginning inventory + Ending inventory) / 2

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22
Q

Direct Write Off Method

A

When an account is determined to be uncollectable, decrease allowance for bad debt and decrease accounts receivable

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23
Q

Recording estimated uncollectibles

A

Debit bad debt expense

Credit allowance for bad debt expense

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24
Q

Amortization

A

Used to expense an intangible asset over its useful life

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25
Who determines the price at which a bond will sell?
The market
26
When an exchange lacks commercial substance you cannot have a ____ on sale
gain
27
Cost of Retail Method
1. (GAS cost) / (Retail GAS) 2. Sales x GAS ratio = COGS 3. (GAS @ cost) - (COGS) = estimated ending inventory
28
Goods Available for Sale Equation
Beginning inventory + Purchases = GAS
29
Ending Inventory Equation
GAS - COGS = ending inventory
30
COGS under the retail method
Cost ratio x sales
31
How to Find Depreciation with the Double Declining Method
1. Historical cost x 2/useful life = x 2. (Historical cost - x) x (2/useful life) = x2 etc.
32
How to find depreciation with the Units of Production Method
1. Historical value - salvage value = x 2. x / # of units = depreciation per unit 3. Yx (depreciation per unit) = X 4. X (depreciation per unit) = X2 etc
33
Gross Margin Percentage
Gross Margin / Sales
34
Accounts Receivable Turn Over Ratio
Sales / average accounts receivable
35
Accounts Receivable Turn Over Ratio
365/ARTR
36
The aging method with bad debt
The aging method is looking for the balance in allowance for bad debt
37
% of sales method with bad debt
the % of sales method is looking for an entry
38
sales are irrelevant with what method in bad debt
aging
39
When have TVM problems with semi-annual, quarterly or monthly, you must ______ periods and _____ interest by 2, 4, or 12
Multiple Periods Divide interest
40
Is a dollar worth more today or tomorrow?
A dollar today is worth more than a dollar tomorrow
41
Direct write off method uses what two accounts
Accounts receivable and cash
42
How to find COGS with Gross Margin Method
GM% = Sales-COGS / Sales
43
The formula for Gross Margin Percentage
SALES-COGS/SALES
44
What type of account is COGS
expense account, debit normal balance
45
Is COGS closed to income summary
Yes
46
Explain COGS
The cost the goods sold cost you
47
What do you replenish from when dealing with petty cash?
the beginning balance of the petty cash account
48
What depreciation method does not use the salvage value?
Double declining
49
In long TVM problems, the first equation is most likely _______ and the second equation is most likely ________
PVA = PMT x PVA (n,i) PV = FV x PVA (n,i)
50
Periodic inventory uses which account that perpetual does not in purchase and sales flow?
Purchases Debit purchases not inventory
51
When using purchases account what is the credit entry?
Accounts payable
52
When another company returns merchandise it goes in
account recievable (credit) sales returns and allowance (debit)
53
When paying off purchases within alloted discount days what three accounts are used
accounts payable is debited to decrease entire ammount discounts is is debited cash is credited
54
When there is a purchase account you debit _____ and credit _____
purchases (not inventory) cash
55
Purchase Returns and Allowances is closed to _____ This is step ____ in closing entries
Purchases 1
56
Purchase discounts get closed to _____ This is step ____ in closing entries
Purchases 2
57
Sales returns and allowances get closed to _____ This is step _____ in closing entries
Sales 3
58
Purchases get closed to ______ This is step ____ in closing
Inventory 4
59
When closing inventory you must find ______ which is a plug number between the current balance and the ending balance. This number is then closed to _____ This is step ____ in closing
COGS COGS 5
60
Sales is closed to ______ This is step _____ in closing
Income Summary 6
61
COGS is closed to _____ This is step _____ in closing
Income Summary 7
62
Income summary is closed to ________ This is the _____ and _____ step in closing
Retained Earnings 8th and final

ACCT 200 (2 decks)

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