Understanding T ACCOUNTS Flashcards
1
Q
A
2
Q
What increases AR?
A
- Sales
3
Q
What decreases AR?
A
- cash collections (cash collected from customers)
- write offs of bad debt
4
Q
What increases allowance for doubtful accounts?
A
- Bad Debt Expense
5
Q
What decreases Allowance for Doubtful accounts?
A
- Write offs
6
Q
A
7
Q
How does Inventory increase?
A
Purchases
8
Q
How does inventory decrease?
A
Cost of Goods Sold
9
Q
How does Property, Plant, and Equipment increase?
A
Purchases of property, plant, or equipment
10
Q
How does property, plant, and equipment decrease?
A
Selling property, plant, and equipment at historic cost
11
Q
How does accumulated depreciation increase?
A
Depreciation expense
12
Q
How does accumulated depreciation decrease?
A
Selling PPE at the difference in accumulated depreciation
13
Q
What is Book Value?
A
Book Value = Historical Cost - Accumulated Depreciation
14
Q
How do you calculate Gain/Loss on sale in PPE?
A
Gain/Loss = Cash Received - Book Value
