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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
Q

Who determines the price at which a bond will sell?

A

The market

26
Q

When an exchange lacks commercial substance you cannot have a ____ on sale

A

gain

27
Q

Cost of Retail Method

A
  1. (GAS cost) / (Retail GAS)
  2. Sales x GAS ratio = COGS
  3. (GAS @ cost) - (COGS) = estimated ending inventory
28
Q

Goods Available for Sale Equation

A

Beginning inventory + Purchases = GAS

29
Q

Ending Inventory Equation

A

GAS - COGS = ending inventory

30
Q

COGS under the retail method

A

Cost ratio x sales

31
Q

How to Find Depreciation with the Double Declining Method

A
  1. Historical cost x 2/useful life = x
  2. (Historical cost - x) x (2/useful life) = x2

etc.

32
Q

How to find depreciation with the Units of Production Method

A
  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
Q

Gross Margin Percentage

A

Gross Margin / Sales

34
Q

Accounts Receivable Turn Over Ratio

A

Sales / average accounts receivable

35
Q

Accounts Receivable Turn Over Ratio

A

365/ARTR

36
Q

The aging method with bad debt

A

The aging method is looking for the balance in allowance for bad debt

37
Q

% of sales method with bad debt

A

the % of sales method is looking for an entry

38
Q

sales are irrelevant with what method in bad debt

A

aging

39
Q

When have TVM problems with semi-annual, quarterly or monthly, you must ______ periods and _____ interest by 2, 4, or 12

A

Multiple Periods

Divide interest

40
Q

Is a dollar worth more today or tomorrow?

A

A dollar today is worth more than a dollar tomorrow

41
Q

Direct write off method uses what two accounts

A

Accounts receivable and cash

42
Q

How to find COGS with Gross Margin Method

A

GM% = Sales-COGS / Sales

43
Q

The formula for Gross Margin Percentage

A

SALES-COGS/SALES

44
Q

What type of account is COGS

A

expense account, debit normal balance

45
Q

Is COGS closed to income summary

A

Yes

46
Q

Explain COGS

A

The cost the goods sold cost you

47
Q

What do you replenish from when dealing with petty cash?

A

the beginning balance of the petty cash account

48
Q

What depreciation method does not use the salvage value?

A

Double declining

49
Q

In long TVM problems, the first equation is most likely _______ and the second equation is most likely ________

A

PVA = PMT x PVA (n,i)

PV = FV x PVA (n,i)

50
Q

Periodic inventory uses which account that perpetual does not in purchase and sales flow?

A

Purchases

Debit purchases not inventory

51
Q

When using purchases account what is the credit entry?

A

Accounts payable

52
Q

When another company returns merchandise it goes in

A

account recievable (credit) sales returns and allowance (debit)

53
Q

When paying off purchases within alloted discount days what three accounts are used

A

accounts payable is debited to decrease entire ammount

discounts is is debited

cash is credited

54
Q

When there is a purchase account you debit _____ and credit _____

A

purchases (not inventory)

cash

55
Q

Purchase Returns and Allowances is closed to _____

This is step ____ in closing entries

A

Purchases

1

56
Q

Purchase discounts get closed to _____

This is step ____ in closing entries

A

Purchases

2

57
Q

Sales returns and allowances get closed to _____

This is step _____ in closing entries

A

Sales

3

58
Q

Purchases get closed to ______

This is step ____ in closing

A

Inventory

4

59
Q

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

A

COGS

COGS

5

60
Q

Sales is closed to ______

This is step _____ in closing

A

Income Summary

6

61
Q

COGS is closed to _____

This is step _____ in closing

A

Income Summary

7

62
Q

Income summary is closed to ________

This is the _____ and _____ step in closing

A

Retained Earnings

8th and final

ACCT 200 (2 decks)

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