final exam Flashcards
1
Q
what account is cash
A
asset
2
Q
what account is accounts receivable
A
asset
3
Q
what account is interest receivable
A
asset
4
Q
what account is inventory
A
asset
5
Q
what account is prepaid insurance
A
asset
6
Q
what account is prepaid rent
A
asset
7
Q
what account is petty cash
A
asset
8
Q
what account is notes receivable
A
asset
9
Q
what account is equipment
A
asset
10
Q
what account is land
A
asset
11
Q
what account is buildings
A
asset
12
Q
what account is intangible (patents, trademarks, goodwill)
A
asset
13
Q
what account is accumulated depreciation
A
contra asset
14
Q
what account is allowance for doubtful accounts
A
contra asset
15
Q
whataccount is accounts payable
A
liability
16
Q
what account is salaries payable
A
liabilities
17
Q
what account is interest payable
A
liabilities
18
Q
what account is notes payable
A
liabilities
19
Q
what account is bonds payable
A
liabilities
20
Q
what account is salaries expense
A
expense
21
Q
what account is rent expense
A
expense
22
Q
what account is cost of good sold
A
expenses
23
Q
what account is advertizing expense
A
liabilities
24
Q
what account is utilities expense
A
expense
25
what account is warranty expense
expenses
26
what account is interest expense
expenses
27
what account is depreiciation expense
expenses
28
what account is supplies expense
expenses
29
what account is bad debt expense
expenses
30
what account is common stock
stockholders equity
31
what account is preferrd stock
stockholders equity
32
what account is additional paid in capital
stockholders equity
33
what account is retained earnings
stockholders equity
34
what account is dividends
stockholders equity
35
what account is treasury stock
contra stockholders equity
36
what account is sales revenue
revenue
37
what account is service revenue
revenue
38
what account is interest revenue
revenue
39
what account is sales discount
contra revenue
40
what account is sales returns
contra revenue
41
what account is sales allowances
contra rev
42
what is the accounting equation broken down
assets= liabilities + stockholders' euqity
stockholders' equity = common stock + retained earnings
retained earnings= net income - dividends
net income= revenue-expenses
43
which T accounts increase with debit and decrease with credit?
Dividends
Expenses
Assets
44
which t accounts increase with a credit and decrease with a debit
Liabilities
Owners
Revenue
45
what do adjusting entries never include?
cash
46
what is debited and credited in adjusting entries
debit expenses, credit revenues
47
adjusting entries examples
supplies expense
supplies
rent expense
prepaid rent
salaries expense
salaries payable
interst receivable
interest revenue
unearned revenue
service revenue
interest expense
interest payable
depreciation expense
accumulated depreciation
48
what are closing entries?
temporary accounts such as revenues, expenses, and dividends that are closed into a permanent account such as retianed earnings at the end of every year
49
how to do a closing entry
closing revenue:
revenue
retained earnings
close expenses:
retained earnings
salaries expense
rent expense
close dividends :
retained earnings
dividends
50
what is included within a bank statement?
- checks outstanding
+ depostis outstanding
+/- bank errors
--------------------------------------
correct ending balance
51
what is included wihtin the company book/ledger
- service fees
+ interest earned
+ cash collections by the bank
- NSF bad checks
+/- company errors
-----------------------------------------------
correct ending balance
52
what is allowance for doubtful accounts for?
(contra accounts receivable)
for when a company estimates that it will not get back a certain amount of the accounts receivable because people are shady
53
adjusting entry to record bad debt expense
bad debt expense
allowance for doubtful accounts
54
entry to write off an account
allowance for doubtful account
accounts receivable
55
sales discount
a discount to customers for early payment
2/10, n/30... customer will receive a 2% discount if they pay within 10 days or no discount if they pay within the required 30 days
56
sales returns and allowances
given for unsatisfactory goods or services
(contra revenue accounts)
sales returns: a customer returns shoes for full price
sales allowance: the company did a bad job painting a house so it allows the customer to pay 400$ less than the agreed price for the job
57
Sales discount 2/10 n/30 example
Company provides services on account
---------------------------------------------------------------
AR 1000
service rev 1000
customer pays within discount period
-----------------------------------------------------------------
cash 980
sales discounts 20
AR 1000
58
sales allowance examples
company provides servies on account
---------------------------------------------------------
AR 1000
service rev 1000
company grants allowances to customer
-----------------------------------------------------------
sales allowances 400
AR 400
custoster pays amount owed
---------------------------------------------------------
cash 600
AR 600
59
total revenue equation
total revenue
- sales discounts
- sales returns
- sales allowances
----------------------------
NET REVENUE
- cogs
-----------------------------
GROSS PROFITS
- other expenses
---------------------------
NET INCOME
60
how to do find Net realizable value
accounts receivable - allowance for doubtful accounts
(the amount of AR we think will be collectible)
61
cost of goods sold is what
an expense! what hte company paid for goods sold this year
62
how can you calculated cogs?
FIFO
LIFO
average cost
specific identification
63
COGS EQUATION
beginning inventory
+ purchases
----------------------------
goods available for sale
- ending inventory
---------------------------------
cogs
64
what are cost of goods sold?
expenses, what the company paid for goods sold this year
65
Find COGS given the company sells 300 for 85 each- FIFO
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820
first bought, first sold.
60(first purchase)+170(second purchase)+70(third purchase)
60*71+170*72+70*74= 21680=COGS
66
Find COGS given the company sells 300 for 85 each- LIFO
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820
last bought, first sold
all of 3rd purchase, 120 from 2nd purchase
180*74+120*72 = 21960 = COGS
67
Find COGS given the company sells 300 for 85 each- average
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820
total coast/total number of units = avg cost per tshirt
170*72+60*71+180*74=(29820/410)300= 21819 = COGS
68
Find COGS given the company sells 300 for 85 each- specific ID
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820
problem will tell you how many from each purchase were sold.
69
what are the 2 categories of long-term assets?
1) property, plant & equipment (pp&e): building, land, equipment, truck, etc.
2) intangible assets: patent, trademark, copyright, goodwill
70
what is the equation for goodwill?
price paid for company - fair value of company = goodwill
71
what is depreciation expense?
a long term asset will decrease in value over time, so we need to record depreciation expense every year to reflect this
72
accumulated depreciation
contra asset that shows the total amount of depreciation expense from all past years for a particular asset
73
how do you record depreciation expense?
depreciation expense (debit)
accumulated depreciation (credit)
74
what are the 3 ways to calculate depreciation expense for the year?
1) straight- line depreciation (consistent from year to year)
cost - residual value/ useful life = depreciation expense per year
2) double-declining balance
depreciation expense will be different every year (never go past residual value
2/number of years = depreciation rate %
3) activity based depreciation
(units are miles, machine hours, etc.)
cost - residual value/ estimated number of units = depreciation expense for the year
75
how do you find the book value of an asset?
cost of asset - accumulated depreciation
76
how do you find gain or loss on sale of asset?
selling price - book value
77
how do you book a notes payable entry?
9/1 Company borrows $100,000 cash, signing a 6-month, 6% note payable
9/1
Cash 100,000
Notes Payable 100,000
12/31 Adjusting entry
Interest Expense 2,000
Interest Payable 2,000
(interest expense is principal * % * fraction of the year... 100,000*.06*4/12)
3/1 company pays back the note at maturity
Notes Payable 100,000
Interest Expense 1,000 <-- 100k*.06*2/12
Interest Payable 2,000 <-- 100k*.06*4/12
Cash 103,000
78
what are contingent liablities and when can they be recorded are a loss
the company could owe some money in the future but it is still up in the air.
1) probable
2) reasonably estimated
HAS TO BE BOTH. if there is a range record the lower $
79
what are warranties
type of contingent liability. is probable that there will be deffects in a percent of our products and customers will want their money back
80
how to record estimation of warranties for the year
warranty expense (debit)
warranty liability (credit)
81
entry to pay off actual warranty expenditures for the year
warranty liability (debit)
cash (credit)
82
carrying value of a bond
original carrying value is the issue price of the bond. changes over time
83
face value of the bond
stated amount of hte bond. stays the same
84
if market % = stated %
the bondwill be issued at FACE VALUE. issue price = face value
85
market > stated
issued at a discount issue < face value
86
stated > market
bond issued at a premium issue price > face value
87
face value bond bookings
issued:
cash (debit)
bonds payable (credit)
interest payment made:
interest expense (debit)
cash (credit)
88
discount bond bookings
issued:
cash (debit)
discount on Bounds Payable (debit)
Bonds Payable (credit)
interest payment
interest expenses (debit)
discount on Bounds Payable (credit)
cash (credit)
89
premium bond bookings
issued:
cahs (debit)
premium on bonds payable (credit)
bonds payable (credit)
interst payment:
interest expense (debit)
premium on bonds payable (debit)
cash (credit)
90
interest expense=
current carrying value * market rate
changes
91
cash=
face value * stated rate
stays the same
92
how do you find the discount or premium for bonds payable?
difference between interest expense and cash payment
93
what will the carrying value of a bond equal at maturity
face value
94
How do you find the Issue price of a bond (carrying value)
On January 1, 2015, Lowe’s issued a $2,000,000 10% bond. Interest is paid
once per year for 6 years and is priced to yield 12%.
price = (principal * pv of $1 factor) + (principal * pv of annuity factor * stated rate)
2mil * .51 (found on chart) + 2mil * 4.11 * .10 = 1.84
95
what do common stockholders get
stockholders get voting rights
96
what do preferred stock holders have
no voting rights but get paid dividends first
97
what is treasury stock
when a compnay buys shares of its own stock...contra-stockholders' equity account
98
what are dividends
cash payments to stockholders paid out of retained earnings
99
common stock has a normal
credit balance
100
preferred stock has a normal
credit balance
101
adition paid in capital ( apic) has a normal
credit balance
102
treasury stock has a normal
debit balance
103
dividens have a normal
debit balance
104
what are authorized shares
number of shares allowed to be issued
105
what are issued shares
number of shares sold
106
what are outstanding shares
number of shares issued, minis treasury stock
107
issue common stock JE
cash ( number of shares * selling price of stock) debit
common stock (number of shares * par value of preferred stock) credit
additional paid in capital (difference) credit
108
issue of preferred stock JE
cash debit
preferred stock credit
additional paid in capital credit
109
buy treasury stock JE
treasury stock (number of shares * purchase price of treasury stock) debit
cash (number of shares * purchase price of treasury stock) credit
110
resell treasury stock JE
cash (number of shares * selling price of treasury stock) debit
additional paid in capital ... debit or credit
treasury stock credit (number of shares * purchase price of treasury stock)
111
declaration of dividends JE
deividends debit
dividendes payable credit
112
when you pay dividends JE
dividends payable debit
cash credit
113
what are operating cash flows
current assets and liabilities, net income, interest, taxes
114
what are investing cash flows
long-term assets, including notes receivable
115
what are financing cash flows
stockholders' equity and long-term liabilities, notes payable
116
accounting equation with cash flows
current assets + long term assets = current liabilities + long term liabilities + stockholders' equity
operating= current assets and liabilities
investing= long term assets
financing= long term liabilities and stockholders' equity
117
what is the indirect method for operating acitivies?
net income
+ depreciation expense
+losses
- gains
+ decrease in current operating assets
- increase in current operating assets
- decrease in current operating liabilities
+ increase in current operating liabilities
---------------------------------------------------------------
net operating cash flow
118
what does vertical analysis do
compares line items on a financial statement to each other as a % (making it possible to compare companies of different sizes)
- divide by total sales for income statement
- divide by total assets for balance sheet
119
what does horizontal analysis do
looks at trends for one company over time (what was the percent change of COGS from 2014 to 2015)
% change= year 2-year 1/ year 1
120
which ratios do you want a lower number for
average collection period (want to collect AR quickly)
average days in inventory (want to sell inventory quickly)
debt to equity ratio (want liabilities to be smaller compared to SE)
121
issued stock
number of shares that have been sold to investors
122
outstanding stock
number of issued shares held by investors
123
authorized stock
total number of shares available to sell
