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Accounting 1 > Final exam > Flashcards

Final exam Flashcards

1
Q

what is property, plants and equipment?

A

long-term assets controlled by the company.
they’re tangible and not intended for sale to customers

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2
Q

what periods do operating expenditures benefit the company?

A

only current period

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3
Q

what are the 3 factors of finding the depreciation?

A

cost
useful life
residual value

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4
Q

what is residual value?

A

estimated amount to be received at the end of an assets useful life

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5
Q

what are the 2 depreciation methods?

A

straight line method

diminishing balance method

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6
Q

how do you calculate the straight line method?

A

with the depreciable amount and the depreciation expense

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7
Q

how do you find the depreciable amount?

A

cost - residual value

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8
Q

how do you find depreciation expense?

A

depreciable amount / useful life in years

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9
Q

how do you calculate the straight line rate?

A

100%/ number of years

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10
Q

how does the diminishing balance method work?

A

has a decreasing annual depreciation expense
calculate the amount based one the carrying amount which declines every year

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11
Q

what dont you need in diminishing balance method?

A

residual value

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12
Q

how do you find annual depreciation for diminishing balance method?

A

beginning of year carrying amount X depreciation rate

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13
Q

how do you find the depreciation rate?

A

straight line ratio X multiplier

100%/ useful life in years

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14
Q

how do you find depreciation expense?

A

beginning of year carrying amount X depreciation rate

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15
Q

how do you find the carrying amount?

A

cost - accumulated depreciation

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16
Q

how do you find if there’s a gain or loss?

A

proceeds - carrying amount

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17
Q

how do you record a sale of property plant ad equipment?

A

debit cash or receivable
debit accumulated depreciation
debit loss or gain on disposal
credit the specific ppe account

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18
Q

what is the entry for sales tax?

A

debit cash
credit sales
and credit sales tax payable

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19
Q

how do you find sales tax payable?

A

sales X sales tax which is a %

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20
Q

how do you calculate sales?

A

total receipts (cash) / sales tax (a %)

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21
Q

what does an entry look like is sales tax payable is paid back?

A

dr. sales tax payable
credit cash

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22
Q

how do you calculate interest?

A

(loan amount X interest rate)/ 12

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23
Q

how do you find retained earnings?

A

Reeves - expenses - dividends declared

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24
Q

do prepayments and accruals have initial entries?

A

prepayments do
accruals dont

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25
Q

what is the adjusted entry for prepaid expense?

A

dr ____ expense
cr prepaid expense

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26
Q

what is the adjusted entry for deferred revenue?

A

dr. deferred revenue
cr. ____ revenue

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27
Q

what is the adjusted entry for accrual expenses?

A

dr ____ expense
cr. ___ payable

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28
Q

what is the adjusted entry for accrual revenue?

A

dr. ____ receivable
cr. _____ revenue

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29
Q

how do you calculate gross profit?

A

sales - cogs

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30
Q

how do you find income before income tax?

A

gross profit - operating expenses

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31
Q

how do you find cost of goods available for sale?

A

beginning inventory + cost of goods purchased

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32
Q

what happens to goods that aren’t sold?

A

they become ending inventory

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33
Q

what are the 2 inventory systems?

A

perpetual and periodic

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34
Q

how do you find end of year common shares?

A

beginning of year common shares + issues common shares - repurchased common shares

35
Q

how do you find end of period retained earnings?

A

beginning of year retained earnings + net income - dividends declared

36
Q

what is the perpetual inventory system?

A

detailed records are kept for the cost of each product purchased and sold

37
Q

what’s the periodic inventory system?

A

detailed record of merchandise aren’t kept throughout the period only at the end is inventory counted

38
Q

what’s the equation for periodic inventory system?

A

COGS= cost of goods available for sale - ending inventory

39
Q

what’s the equation for perpetual inventory system?

A

ending inventory = cost of goods available for sale - COGS

40
Q

What’s fob destination?

A

company owns the good until buyer receives it

41
Q

what’s fob shipping point?

A

ownership transfers from seller to buyer as soon as goods ship

42
Q

how do you find gross profit?

A

sales - COGS

43
Q

how do you find income from operations?

A

gross profit - operating expenses

44
Q

how do you find income before income tax?

A

income from operations + non operating revenue - non operating expenses

45
Q

how does specific identification work?

A

it tracks the physical flow of goods

46
Q

when is specific inventory used?

A

when actual costs of goods can be determined and products are distinguishable

47
Q

what are subsidiary ledgers?

A

a group of accounts that share common characteristics

48
Q

what happens to expected credit losses?

A

they’re debited to credit losses

49
Q

the is credit loss expense recognized?

A

in the period its related sales revenue is reported

50
Q

what does the allowance method do? what is the account called?

A

estimates expected credit loss at the end of each period

allowance for expected credit losses

51
Q

how do you record a write off

A

dr. allowance for expected credit loss
cr. accounts receivable

52
Q

how do you record a recovery for an uncollectible? explain and show it

A

in 2 steps. first reverse the entry then record the cash collection

  1. dr. a/r cr. allowance for expected credit losses
  2. dr. cash cr. a/r
53
Q

what are issued common shares?

A

the number of shares sold

54
Q

how do you make an entry for shares issued for cash?

A

dr. cash
cr. common shares

55
Q

what are the 3 important dates for dividends?

A

declaration date
record date
payment date

56
Q

how do you record the declaration date?

A

dr. dividends declared
cr. dividends payable

57
Q

what happens on the record date?

A

no entry is made

58
Q

how is payment date recorded?

A

dr. dividends payable
cr. cash

59
Q

how do you record declaration date for stock dividends?

A

dr. dividends declared
cr. stock dividends distributable

60
Q

how do you record distribution date for stock dividends?

A

dr. stock dividends distributable
cr. common shares

61
Q

what are cash equivalents?

A

short term, highly liquid investments that can easily be turned to cash

62
Q

what are the 3 parts of statement of cash flows?

A

operating activites
investing activities
financing activities

63
Q

what is a liquidity ratio?

A

Measure short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash

64
Q

what’s a solvency ratio?

A

Measure the ability of the company to survive over a long period of time; the ability to pay its total liabilities

65
Q

what’s a profitability ratio?

A

Measure the operating success of a company for a specific period of time

66
Q

what’s a current ratio? how is it calculated?

A

Measures short-term debt paying ability and liquidity

Current Ratio = Current Assets/Current Liabilities

67
Q

what’s a receivable turnover? how’s it calculated?

A

Measures liquidity of receivables

Receivable Turnover = Credit Sales/Average Gross Accounts Receivable

68
Q

what’s average collection period? how’s it calculated?

A

Measures number of days receivables are outstanding

Average Collection Period = 365 Days/Receivables Turnover

69
Q

what’s inventory turnover? how’s it calculated?

A

Measures liquidity of inventory

Inventory Turnover = Costs of Goods Sold/Average Inventory

70
Q

what’s days in inventory? how’s it calculated?

A

Measures number of days inventory is on hand

Days in Inventory = 365 Days/Inventory Turnover

71
Q

what’s debt to total asset ratio? how’s it calculated?

A

Measures % of total assets provided financed with debt

Debt to Total Assets = Total Liabilities/Total Assets

72
Q

wats time interest earned? how’s it calculated?

A

Measures ability to meet interest payments as they
come due

Times Interest Earned =

Net Income + Interest Expense + Income Tax Expense (EBIT)/Interest Expense

73
Q

what’s free cash flow? how’s it calculated?

A

Measures cash available for paying dividends or expanding operations

Free Cash Flow = Net Cash Provided (Used) by Operating Activities - Net Capital Expenditures - Dividends Paid

74
Q

what’s gross profit margin? how’s it calculated?

A

Measures margin between selling price and cost of goods sold

Gross Profit Margin = Gross Profit/Sales

75
Q

what’s profit margin? how’s it calculated?

A

Measures the percentage of profit generated by each dollar of sales

Profit Margin = Net Income/Sales

76
Q

what’s asset turnover? how’s it calculated?

A

Measures how efficiently assets are used to generate sales

Asset Turnover = Sales/Average Total Assets

77
Q

what’s return on asset? how’s it calculated?

A

Measures overall profitability of assets

Return on Assets = Net Income/Average Total Assets

78
Q

whats return on common shareholders equity?

A

Measures overall profitability of shareholders’ investment

Return on Common Shareholders’ Equity = Net Income - Preferred Dividends Declared/Average Common Shareholder’s Equity

79
Q

what’s basic earnings per share? how’s it calculated?

A

Measures profit earned on each common share

Earnings Per Share = Net Income - Preferred Dividends Declared/Weighted Average Number of Common Shares

80
Q

what’s price earnings ratio? how’s it calculated?

A

Measures relationship between market price per share and earnings per share

Price-Earnings Ratio = Market price per Share/Basic Earnings per Share

81
Q

what’s payout ratio? how’s it calculated?

A

Measures % of net income distributed in the form of cash dividends

Payout Ratio = Cash Dividends Declared/Net Income

82
Q

what’s dividend yield? how’s it calculated?

A

Measures rate of return earned from dividends during the year

Dividend Yield = Dividends Declared per Share/Market Price per Share

83
Q
A

Accounting 1 (1 decks)

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