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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
what is the adjusted entry for prepaid expense?
dr ____ expense cr prepaid expense
26
what is the adjusted entry for deferred revenue?
dr. deferred revenue cr. ____ revenue
27
what is the adjusted entry for accrual expenses?
dr ____ expense cr. ___ payable
28
what is the adjusted entry for accrual revenue?
dr. ____ receivable cr. _____ revenue
29
how do you calculate gross profit?
sales - cogs
30
how do you find income before income tax?
gross profit - operating expenses
31
how do you find cost of goods available for sale?
beginning inventory + cost of goods purchased
32
what happens to goods that aren't sold?
they become ending inventory
33
what are the 2 inventory systems?
perpetual and periodic
34
how do you find end of year common shares?
beginning of year common shares + issues common shares - repurchased common shares
35
how do you find end of period retained earnings?
beginning of year retained earnings + net income - dividends declared
36
what is the perpetual inventory system?
detailed records are kept for the cost of each product purchased and sold
37
what's the periodic inventory system?
detailed record of merchandise aren't kept throughout the period only at the end is inventory counted
38
what's the equation for periodic inventory system?
COGS= cost of goods available for sale - ending inventory
39
what's the equation for perpetual inventory system?
ending inventory = cost of goods available for sale - COGS
40
What's fob destination?
company owns the good until buyer receives it
41
what's fob shipping point?
ownership transfers from seller to buyer as soon as goods ship
42
how do you find gross profit?
sales - COGS
43
how do you find income from operations?
gross profit - operating expenses
44
how do you find income before income tax?
income from operations + non operating revenue - non operating expenses
45
how does specific identification work?
it tracks the physical flow of goods
46
when is specific inventory used?
when actual costs of goods can be determined and products are distinguishable
47
what are subsidiary ledgers?
a group of accounts that share common characteristics
48
what happens to expected credit losses?
they're debited to credit losses
49
the is credit loss expense recognized?
in the period its related sales revenue is reported
50
what does the allowance method do? what is the account called?
estimates expected credit loss at the end of each period allowance for expected credit losses
51
how do you record a write off
dr. allowance for expected credit loss cr. accounts receivable
52
how do you record a recovery for an uncollectible? explain and show it
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
what are issued common shares?
the number of shares sold
54
how do you make an entry for shares issued for cash?
dr. cash cr. common shares
55
what are the 3 important dates for dividends?
declaration date record date payment date
56
how do you record the declaration date?
dr. dividends declared cr. dividends payable
57
what happens on the record date?
no entry is made
58
how is payment date recorded?
dr. dividends payable cr. cash
59
how do you record declaration date for stock dividends?
dr. dividends declared cr. stock dividends distributable
60
how do you record distribution date for stock dividends?
dr. stock dividends distributable cr. common shares
61
what are cash equivalents?
short term, highly liquid investments that can easily be turned to cash
62
what are the 3 parts of statement of cash flows?
operating activites investing activities financing activities
63
what is a liquidity ratio?
Measure short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash
64
what's a solvency ratio?
Measure the ability of the company to survive over a long period of time; the ability to pay its total liabilities
65
what's a profitability ratio?
Measure the operating success of a company for a specific period of time
66
what's a current ratio? how is it calculated?
Measures short-term debt paying ability and liquidity Current Ratio = Current Assets/Current Liabilities
67
what's a receivable turnover? how's it calculated?
Measures liquidity of receivables Receivable Turnover = Credit Sales/Average Gross Accounts Receivable
68
what's average collection period? how's it calculated?
Measures number of days receivables are outstanding Average Collection Period = 365 Days/Receivables Turnover
69
what's inventory turnover? how's it calculated?
Measures liquidity of inventory Inventory Turnover = Costs of Goods Sold/Average Inventory
70
what's days in inventory? how's it calculated?
Measures number of days inventory is on hand Days in Inventory = 365 Days/Inventory Turnover
71
what's debt to total asset ratio? how's it calculated?
Measures % of total assets provided financed with debt Debt to Total Assets = Total Liabilities/Total Assets
72
wats time interest earned? how's it calculated?
Measures ability to meet interest payments as they come due Times Interest Earned = Net Income + Interest Expense + Income Tax Expense (EBIT)/Interest Expense
73
what's free cash flow? how's it calculated?
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
what's gross profit margin? how's it calculated?
Measures margin between selling price and cost of goods sold Gross Profit Margin = Gross Profit/Sales
75
what's profit margin? how's it calculated?
Measures the percentage of profit generated by each dollar of sales Profit Margin = Net Income/Sales
76
what's asset turnover? how's it calculated?
Measures how efficiently assets are used to generate sales Asset Turnover = Sales/Average Total Assets
77
what's return on asset? how's it calculated?
Measures overall profitability of assets Return on Assets = Net Income/Average Total Assets
78
whats return on common shareholders equity?
Measures overall profitability of shareholders’ investment Return on Common Shareholders' Equity = Net Income - Preferred Dividends Declared/Average Common Shareholder's Equity
79
what's basic earnings per share? how's it calculated?
Measures profit earned on each common share Earnings Per Share = Net Income - Preferred Dividends Declared/Weighted Average Number of Common Shares
80
what's price earnings ratio? how's it calculated?
Measures relationship between market price per share and earnings per share Price-Earnings Ratio = Market price per Share/Basic Earnings per Share
81
what's payout ratio? how's it calculated?
Measures % of net income distributed in the form of cash dividends Payout Ratio = Cash Dividends Declared/Net Income
82
what's dividend yield? how's it calculated?
Measures rate of return earned from dividends during the year Dividend Yield = Dividends Declared per Share/Market Price per Share
83

Accounting 1 (1 decks)

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