midterm Flashcards
Under periodic inventory system, “___” is used to describe the products that have been purchased and intended for sale
Purchases
Under perpetual inventory system, account title used to describe the products for sale is “_____”
Merchandise Inventory
Normal balance is credit
they are contra accounts : deduction from the Purchases account (2)
Purchase Returns
Purchase Allowances
is a purchase reduction from a published list.
Granted at point of sale hence immediately deducted from the list price
A trade discount
This discount is offered to encourage prompt payment
Cash Discount
Cash Discount of Seller
Sales Discount
Cash Discount of Buyer
Purchase Discount
Is a tax levied by the government to certain providers of goods and services.
VALUE-ADDED TAX OR VAT
Annual gross revenue should exceed _______ before the company is required to pay this privilege tax
P1,919,500
type of taxes
input
output
types of VAT
inclusive
exclusive
List of all accounts with their respective debit or credit balances.
Prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated
TRIAL BALANCE
Basic adjusting entries
Accruals Prepayments Precollections Depreciation and Amortization Estimated Uncollectible accounts Ending Inventory
an income that is already earned but not yet received
Accrued revenue
an incurred and unrecorded expense that remains unpaid because payment is not yet due
Accrued Expense
is the used or expired portion of productive facilities such as building, furniture and fixtures, and equipment which have been recorded at their acquisition costs as capital expenditures
Depreciation
Method in computing depreciation:
Straight line method
(Acquisition cost - salvage value) / estimated economic life in years
DEPRECIATION
Adjusting entry:
Depreciation Expense
Accumulated Depreciation
is the allocation of the acquisition costs of an intangible asset over its legal or accounting estimated life
Amortization
is an asset that has no physical existence but provides the owner some selling and operational advantages over competitors
Examples are goodwill, franchise, copyright, patent and trade names
Intangible asset
Formula for amortizing intangible assets
Annual amortization expense = acquisition cost
/legal or accounting life
When accounts receivables are already long overdue, some portion should be recorded as
uncollectible accounts AKA bad debts
Recording uncollectible accounts records bad debts expense only when there is certainty that the accounts receivable would become worthless
Direct write off method
For general-purpose reporting.
Records bad debts expense even if the uncollectibility is only estimated.
Preferred method based on the matching principle.
Allowance method
This multi column document provides an efficient way to summarize the data for financial statements
The accountant generally prepares a worksheet when it is time to adjust the accounts and prepare financial statements.
WORKSHEET
Receipts from investments by owners
Receipts from issuance of notes payable
Cash Inflows
Payments to owners in the form of withdrawals
Payments to settle notes payable
Cash Outflows
umutang
debitor
nagpautang
creditor
