Flashcards
What are characteristics of Internal use software?
1) software acquired, internally developed or modified solely to meet entity’s needs
2) during software’s development or modification, no substantive plan exists to market the software externally
What are start-up activities?
Onetime activities related to opening a new facility as well as introducing a new product or service and conducting business in a new territory. Expense when incurred.
Mod 12: monetary current assets and current liabilities
What is Risk of accounting loss and Off-balance-sheet risk?
1) risk of accounting loss is account receivable less U collectible amount
2) off-balance-sheet risk is potential loss that may exceed amount recognized as an asset
Mod 12: monetary current assets and current liabilities
How do you compute allowance for u collectible accounts with aging schedule?
Total Uncollectibles computed is amount used for ending balance in allowance account. This is difference from annual sales method.
Mod 12: current assets/liabilities
What is assignment and factoring of a/r?
Both are methods to generate cash from A/R.
Assignment- financing arrangement, where owner of AR (assignor) obtains loan from lender (assignee) by pledging AR as collateral.
Factoring - sale of, or borrowing on AR. “Factors” buy receivables (for a fee) and collect payments directly from customers.
Mod 12: current assets/liabilities
In accordance with accounting for transfers and servicing, what is NOT disclosed?
Description of assets and liabilities with estimable fair values (non-estimable fair values requires disclosure).
Mod 12/current assets/liabilities
When purchases recorded using net method, purchases and AP are recorded at amount net of cash discounts. Failure to take advantage is recorded in Purchase Discounts Lost account. What is the journal entry?
Purchase discounts lost xx
Purchase discounts xx
AP xx
Purchases xx
Mod 12
ST obligation can be reclassified as LT obligation if…
Enterprise intends to refinance the obligation on LT basis AND the intent is supported by the ability to refinance.
Mod 12: current assets/liabilities
Effective interest rate formula?
Effective interest rate = interest paid/cash rec’d
