Final Exam Flashcards
CH 1 What is the basic accounting equation?
Assets=Liabilities+Stockholder Equity
CH 1 How do you calculate net income?
Revenues - expenses=net income
CH 2 How do you total a T account?
Include larger total at bottom - do not total out both! Do the difference.
CH 2 Retained earnings falls where?
Under R - Revenue - credit side increase
CH 2 Common stock falls where?
Under Owner Equity - credit side increase
CH 3 How to adjust “Supplies” for the next month?
Look at past month’s balance, this months spending on them, and then the difference will be actual “supplies expense”
CH 3 How is deferred revenue recorded?
Contra account - recorded on debit as increase side - credit would be for “service revenue”
CH 3 How do you handle salaries to be paid?
Debit salaries expense, credit salaries payable
CH 3 How do you round out Interest not yet paid for end of year?
Debit interest expense for accumulated months, credit interest payable
CH 3 How is income statement (retained earnings) calculated?
All sales revenues vs all expenses - total will either be a net loss or net gain
CH3 Stockholders equity statement
Always look at past and current numbers, add them ALL to chart and total out
CH3 What type of asset is equipment?
Long term asset
CH3 Where does accumulated depreciation go?
It is subtracted from equipment asset
CH3 How do you calculate total stockholder equity?
Common stock plus retained earnings
CH 3 How to close out various accounts?
Log numbers on the opposite side
CH4 Weird items that are included in the year end cash to report?
Checks that still need to be deposited, short term investments that will mature within 3 months
CH4 Bank vs cash reconciliation
Make sure to make numbers negative if they need to be- also the end balances should match the company ledger balance! - record a “bank error” for the difference
CH 5 How to record a sales allowance?
Record sales allowance as an adjustment on the debit side, credit accounts receivable
CH 5 How to record Uncollectible accounts
Debit BAD DEBT EXPENSE, credit ALLOWANCE FOR UNCOLLECTIBLE accounts - read whole problem for actual uncollectible numbers!
CH 5 How to calculate net realizable value
Updated “Accounts Recievable” less allowance for uncollectible accounts = net realizable value
CH 5 Notes vs accounts receivable
Make sure to pay attention to what type it is!
CH 5 What if a customer signs a note to pay off an account?
Debit notes receivable, credit accounts receivable
CH 6 How to record inventory sold in perpetual system?
Go back in final step and debit “COGS” and credit inventory for the actual cost that was spent on original items
CH 6 How to record freight costs?
Included under “Inventory” debit
CH 6 How are returns recorded?
As a debit under accounts payable
Ch 7 What is allowed to be claimed for purchasing land?
Title insurance, leveling, tearing down structures, insurance for past
CH 7 How to record new machine expenses?
Equipment, prepaid insurance separately, then cash and accounts payable as needed
CH 7 When calculating depreciation, what should you keep in mind?
Start and end date, and divide by month etc
CH 7 How to record sales with taxes?
Accounts receivable on debit side, sales and sales tax on credit side
CH 8 How to record notes payable interest when it hasnt been paid yet BUT it is the end of the year?
Debit interest expense, credit interest payable
CH 8 How to pay off the note at maturity? What is recorded?
Notes payable, interest payable, interest expense on debit, cash on credit
CH 8 How to record contingent liabilities for warranties? How to record actual?
- Warranty expense on debit, warranty liability on credit
- Actual is recorded as warranty liability debit and cash credit
CH 9 What is interest expense based on for bonds
Market value - IM (interest from market)
CH 9 What is Cash paid value based on
Stated value (cash stated) CS
CH 9 How is bond that is purchase for lower than stated value recorded during payments?
Include a “discount on bonds payable” layer as debit along with cash
CH 10 How to record the “entry on date of record” for dividends?
None needed - tricked ya
