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Question 1

Cash equivalents must mature within

Answer 1

3 months from the purchase date.

Question 2

cash equivalents include:

Answer 2

• money market
  -treasury bill maturing in 3 moths or less
  -certificate of deposit due in 3 moths or less
  -bank draft
• commercial paper within 3 months
  these are just some not ALL

Question 3

when recording net sales revenue you should

Answer 3

deduct the amount estimated for sales returns associated

Question 4

B.A.S.E for ARO

Answer 4

B- Beginning balance
A- additions: recoveries
S- Subtract: write offs
E- ending balance
Then plus for the exp

Question 5

uncollectible allowance is a

Answer 5

plug account

Question 6

with recourse vs. without recourse

Answer 6

with recourse- risk is with compnay who sold a/r
without recourse- risk transfers to company who bought aa/r

Question 7

the discount rate on a note receivable is always applied

Answer 7

less the maturity value

Question 8

How to calculate COGS when given sales amount?

Answer 8

COGS = Sales / 1 + markup

Question 9

land cost include

Answer 9

The costs of getting the land ready for intended use including removing old buildings less salvage plus title insurance and legal fees

Question 10

inventorial cost include

Answer 10

any cost that are required to get the inventory ready to sell

Question 11

ending inventory includes

Answer 11

goods on hand and goods in trasnit depending on shipping terms

Question 12

double declining rate is calculated by

Answer 12

1/n * 200%
n=time period ex: 10 year
=1/10*200%

Question 13

depletion base =

Answer 13

purchase price + developmental costs + estimated resoration costs - expected salvage value

Question 14

net realizable value =

Answer 14

selling price - costs to complete and sell

Question 15

The consignor is:

Answer 15

“the seller” owns the goods so should include in inventory

Question 16

the consignee

Answer 16

holds and sells the goods on the consignors behalf

Question 17

sum-of-the-years-digits depreciation method

Answer 17

accelerated methods of depreciation that provides higher depreciation expense in early years and lower charges in later years

Question 18

sum-of-the-years-digit calculation

Answer 18

each year is numbered and then added
ex:
5 year useful life
1+2+3+4+5=15
then the depreciation calculation is
= (cost - salvage value) x remaining life of the asset / sum-of-the-years-digits

Question 19

market ceiling

Answer 19

an items net selling price less the costs to complete and dispose (NRV)

Question 20

market floor

Answer 20

market ceiling less a normal profit margin

Question 21

when computing lower of cost or market rule may be applied to

Answer 21

a single item, a category or total inventory

Question 22

You should expense ordinary repairs but capitalize:

Answer 22

expenditures which are additions, benefit several period
improve efficiency etc

Question 23

Are debt issuance costs included in expenditures?

Answer 23

No

Question 24

an old building being actively marketed for sale will be valued

Answer 24

at the lower of its book value or net relizable value which is the fair value less cost to sell

Question 25

all organziation costs and start-up costs are

Answer 25

expensed as incurred

Question 26

price index =

Answer 26

ending inventory at current year cost / ending inventory at base year cost

Question 27

start up cost should be

Answer 27

expensed as incurred

Question 28

when it comes to fixed assets you should capatilize

Answer 28

all costs necessary to put a fixed asset in place

Question 29

leasehold improvements are capitalized and then amortized over the lesser of the

Answer 29

life of the improvement or the remaining term of the lease

Question 30

Freight out

Answer 30

is a selling expense

Question 31

how do you treat a write off of inventory when it becomes obsolete?

Answer 31

as an operating loss