Week 4 Flashcards
To put a prepaid expense into the journal, what type of accounting
Accrual accounting
Prepaid 12,000 for rent, what accounts would be debited and credited
Cash credited and prepaid rent account debited
Prepaid 12,000 for rent, what would debited and credited after 1 month
Rental expense debited, prepaid rent would be credited
Define the difference between tangible and intangible
Physical items compared to invisible items, example inventory compared to insurance
Name 3 things that are mandatory for sales receipts ?
Cost of items, Items sold, payment method
Promissory notes are ?
is a signed document containing a written promise to pay a stated sum
Where would you use a promissory note?
When converting a accounts receivable to a note receivable or inter company loans
Notes receivable/payables are on what financial document
balance sheet
Current Assets/Liabilities are ?
within a year
Non current Assets/Liabilities ?
longer than a year
What is the compound monthly interest formula
Principle * interest *30/365
What accounts are affected during monthly interest payments (Credit/Debit) on a promissory note
Cash - Debited, Notes receivables credited, Interest- Credited
Uncollectables define and one way to deal with it
money that wont come in, credit memo to bad debit
Direct write off
Is basic way of writing off receivables accounts that you will most likely not collect on.
Allowance method
Is a set amount that a company estimates how many/much of its account receivable won’t pay. Generally calculated by how previous years numbers.
