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accounting > final exam > Flashcards

final exam Flashcards

1
Q

what account is cash

A

asset

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2
Q

what account is accounts receivable

A

asset

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3
Q

what account is interest receivable

A

asset

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4
Q

what account is inventory

A

asset

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5
Q

what account is prepaid insurance

A

asset

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6
Q

what account is prepaid rent

A

asset

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7
Q

what account is petty cash

A

asset

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8
Q

what account is notes receivable

A

asset

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9
Q

what account is equipment

A

asset

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10
Q

what account is land

A

asset

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11
Q

what account is buildings

A

asset

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12
Q

what account is intangible (patents, trademarks, goodwill)

A

asset

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13
Q

what account is accumulated depreciation

A

contra asset

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14
Q

what account is allowance for doubtful accounts

A

contra asset

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15
Q

whataccount is accounts payable

A

liability

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16
Q

what account is salaries payable

A

liabilities

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17
Q

what account is interest payable

A

liabilities

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18
Q

what account is notes payable

A

liabilities

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19
Q

what account is bonds payable

A

liabilities

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20
Q

what account is salaries expense

A

expense

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21
Q

what account is rent expense

A

expense

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22
Q

what account is cost of good sold

A

expenses

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23
Q

what account is advertizing expense

A

liabilities

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24
Q

what account is utilities expense

A

expense

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25
Q

what account is warranty expense

A

expenses

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26
Q

what account is interest expense

A

expenses

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27
Q

what account is depreiciation expense

A

expenses

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28
Q

what account is supplies expense

A

expenses

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29
Q

what account is bad debt expense

A

expenses

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30
Q

what account is common stock

A

stockholders equity

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31
Q

what account is preferrd stock

A

stockholders equity

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32
Q

what account is additional paid in capital

A

stockholders equity

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33
Q

what account is retained earnings

A

stockholders equity

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34
Q

what account is dividends

A

stockholders equity

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35
Q

what account is treasury stock

A

contra stockholders equity

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36
Q

what account is sales revenue

A

revenue

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37
Q

what account is service revenue

A

revenue

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38
Q

what account is interest revenue

A

revenue

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39
Q

what account is sales discount

A

contra revenue

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40
Q

what account is sales returns

A

contra revenue

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41
Q

what account is sales allowances

A

contra rev

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42
Q

what is the accounting equation broken down

A

assets= liabilities + stockholders’ euqity

stockholders’ equity = common stock + retained earnings

retained earnings= net income - dividends

net income= revenue-expenses

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43
Q

which T accounts increase with debit and decrease with credit?

A

Dividends

Expenses

Assets

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44
Q

which t accounts increase with a credit and decrease with a debit

A

Liabilities
Owners
Revenue

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45
Q

what do adjusting entries never include?

A

cash

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46
Q

what is debited and credited in adjusting entries

A

debit expenses, credit revenues

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47
Q

adjusting entries examples

A

supplies expense
supplies

rent expense
prepaid rent

salaries expense
salaries payable

interst receivable
interest revenue

unearned revenue
service revenue

interest expense
interest payable

depreciation expense
accumulated depreciation

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48
Q

what are closing entries?

A

temporary accounts such as revenues, expenses, and dividends that are closed into a permanent account such as retianed earnings at the end of every year

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49
Q

how to do a closing entry

A

closing revenue:

revenue
retained earnings

close expenses:

retained earnings
salaries expense
rent expense

close dividends :

retained earnings
dividends

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50
Q

what is included within a bank statement?

A
  • checks outstanding
    + depostis outstanding
    +/- bank errors
    ————————————–
    correct ending balance
51
Q

what is included wihtin the company book/ledger

A
  • service fees
    + interest earned
    + cash collections by the bank
  • NSF bad checks
    +/- company errors
    ———————————————–
    correct ending balance
52
Q

what is allowance for doubtful accounts for?

A

(contra accounts receivable)
for when a company estimates that it will not get back a certain amount of the accounts receivable because people are shady

53
Q

adjusting entry to record bad debt expense

A

bad debt expense
allowance for doubtful accounts

54
Q

entry to write off an account

A

allowance for doubtful account
accounts receivable

55
Q

sales discount

A

a discount to customers for early payment
2/10, n/30… customer will receive a 2% discount if they pay within 10 days or no discount if they pay within the required 30 days

56
Q

sales returns and allowances

A

given for unsatisfactory goods or services

(contra revenue accounts)

sales returns: a customer returns shoes for full price

sales allowance: the company did a bad job painting a house so it allows the customer to pay 400$ less than the agreed price for the job

57
Q

Sales discount 2/10 n/30 example

A

AR 1000
service rev 1000

cash 980
sales discounts 20
AR 1000

58
Q

sales allowance examples

A

AR 1000
service rev 1000

sales allowances 400
AR 400

cash 600
AR 600

59
Q

total revenue equation

A

total revenue
- sales discounts
- sales returns
- sales allowances
—————————-
NET REVENUE
- cogs
—————————–
GROSS PROFITS
- other expenses
—————————
NET INCOME

60
Q

how to do find Net realizable value

A

accounts receivable - allowance for doubtful accounts

(the amount of AR we think will be collectible)

61
Q

cost of goods sold is what

A

an expense! what hte company paid for goods sold this year

62
Q

how can you calculated cogs?

A

FIFO
LIFO
average cost
specific identification

63
Q

COGS EQUATION

A

beginning inventory
+ purchases
—————————-
goods available for sale
- ending inventory
———————————
cogs

64
Q

what are cost of goods sold?

A

expenses, what the company paid for goods sold this year

65
Q

Find COGS given the company sells 300 for 85 each- FIFO
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820

A

first bought, first sold.
60(first purchase)+170(second purchase)+70(third purchase)
6071+17072+70*74= 21680=COGS

66
Q

Find COGS given the company sells 300 for 85 each- LIFO
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820

A

last bought, first sold
all of 3rd purchase, 120 from 2nd purchase
18074+12072 = 21960 = COGS

67
Q

Find COGS given the company sells 300 for 85 each- average
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820

A

total coast/total number of units = avg cost per tshirt
17072+6071+180*74=(29820/410)300= 21819 = COGS

68
Q

Find COGS given the company sells 300 for 85 each- specific ID
Date # of t-shirts Cost per t-shirt Total Cost
1/1 Beginning Inventory 60 $71 $4,260
5/5 Purchase 170 $72 $12,240
11/3 Purchase 180 $74 $13,320
410 t-shirts $29,820

A

problem will tell you how many from each purchase were sold.

69
Q

what are the 2 categories of long-term assets?

A

1) property, plant & equipment (pp&e): building, land, equipment, truck, etc.
2) intangible assets: patent, trademark, copyright, goodwill

70
Q

what is the equation for goodwill?

A

price paid for company - fair value of company = goodwill

71
Q

what is depreciation expense?

A

a long term asset will decrease in value over time, so we need to record depreciation expense every year to reflect this

72
Q

accumulated depreciation

A

contra asset that shows the total amount of depreciation expense from all past years for a particular asset

73
Q

how do you record depreciation expense?

A

depreciation expense (debit)
accumulated depreciation (credit)

74
Q

what are the 3 ways to calculate depreciation expense for the year?

A

1) straight- line depreciation (consistent from year to year)
cost - residual value/ useful life = depreciation expense per year
2) double-declining balance
depreciation expense will be different every year (never go past residual value
2/number of years = depreciation rate %
3) activity based depreciation
(units are miles, machine hours, etc.)
cost - residual value/ estimated number of units = depreciation expense for the year

75
Q

how do you find the book value of an asset?

A

cost of asset - accumulated depreciation

76
Q

how do you find gain or loss on sale of asset?

A

selling price - book value

77
Q

how do you book a notes payable entry?
9/1 Company borrows $100,000 cash, signing a 6-month, 6% note payable

A

9/1
Cash 100,000
Notes Payable 100,000
12/31 Adjusting entry
Interest Expense 2,000
Interest Payable 2,000
(interest expense is principal * % * fraction of the year… 100,000.064/12)

3/1 company pays back the note at maturity
Notes Payable 100,000
Interest Expense 1,000 <– 100k.062/12
Interest Payable 2,000 <– 100k.064/12
Cash 103,000

78
Q

what are contingent liablities and when can they be recorded are a loss

A

the company could owe some money in the future but it is still up in the air.
1) probable
2) reasonably estimated
HAS TO BE BOTH. if there is a range record the lower $

79
Q

what are warranties

A

type of contingent liability. is probable that there will be deffects in a percent of our products and customers will want their money back

80
Q

how to record estimation of warranties for the year

A

warranty expense (debit)
warranty liability (credit)

81
Q

entry to pay off actual warranty expenditures for the year

A

warranty liability (debit)
cash (credit)

82
Q

carrying value of a bond

A

original carrying value is the issue price of the bond. changes over time

83
Q

face value of the bond

A

stated amount of hte bond. stays the same

84
Q

if market % = stated %

A

the bondwill be issued at FACE VALUE. issue price = face value

85
Q

market > stated

A

issued at a discount issue < face value

86
Q

stated > market

A

bond issued at a premium issue price > face value

87
Q

face value bond bookings

A

issued:
cash (debit)
bonds payable (credit)

interest payment made:
interest expense (debit)
cash (credit)

88
Q

discount bond bookings

A

issued:
cash (debit)
discount on Bounds Payable (debit)
Bonds Payable (credit)

interest payment
interest expenses (debit)
discount on Bounds Payable (credit)
cash (credit)

89
Q

premium bond bookings

A

issued:
cahs (debit)
premium on bonds payable (credit)
bonds payable (credit)

interst payment:
interest expense (debit)
premium on bonds payable (debit)
cash (credit)

90
Q

interest expense=

A

current carrying value * market rate
changes

91
Q

cash=

A

face value * stated rate
stays the same

92
Q

how do you find the discount or premium for bonds payable?

A

difference between interest expense and cash payment

93
Q

what will the carrying value of a bond equal at maturity

A

face value

94
Q

How do you find the Issue price of a bond (carrying value)
On January 1, 2015, Lowe’s issued a $2,000,000 10% bond. Interest is paid
once per year for 6 years and is priced to yield 12%.

A

price = (principal * pv of $1 factor) + (principal * pv of annuity factor * stated rate)

2mil * .51 (found on chart) + 2mil * 4.11 * .10 = 1.84

95
Q

what do common stockholders get

A

stockholders get voting rights

96
Q

what do preferred stock holders have

A

no voting rights but get paid dividends first

97
Q

what is treasury stock

A

when a compnay buys shares of its own stock…contra-stockholders’ equity account

98
Q

what are dividends

A

cash payments to stockholders paid out of retained earnings

99
Q

common stock has a normal

A

credit balance

100
Q

preferred stock has a normal

A

credit balance

101
Q

adition paid in capital ( apic) has a normal

A

credit balance

102
Q

treasury stock has a normal

A

debit balance

103
Q

dividens have a normal

A

debit balance

104
Q

what are authorized shares

A

number of shares allowed to be issued

105
Q

what are issued shares

A

number of shares sold

106
Q

what are outstanding shares

A

number of shares issued, minis treasury stock

107
Q

issue common stock JE

A

cash ( number of shares * selling price of stock) debit

common stock (number of shares * par value of preferred stock) credit

additional paid in capital (difference) credit

108
Q

issue of preferred stock JE

A

cash debit
preferred stock credit
additional paid in capital credit

109
Q

buy treasury stock JE

A

treasury stock (number of shares * purchase price of treasury stock) debit
cash (number of shares * purchase price of treasury stock) credit

110
Q

resell treasury stock JE

A

cash (number of shares * selling price of treasury stock) debit
additional paid in capital … debit or credit
treasury stock credit (number of shares * purchase price of treasury stock)

111
Q

declaration of dividends JE

A

deividends debit
dividendes payable credit

112
Q

when you pay dividends JE

A

dividends payable debit
cash credit

113
Q

what are operating cash flows

A

current assets and liabilities, net income, interest, taxes

114
Q

what are investing cash flows

A

long-term assets, including notes receivable

115
Q

what are financing cash flows

A

stockholders’ equity and long-term liabilities, notes payable

116
Q

accounting equation with cash flows

A

current assets + long term assets = current liabilities + long term liabilities + stockholders’ equity

operating= current assets and liabilities
investing= long term assets
financing= long term liabilities and stockholders’ equity

117
Q

what is the indirect method for operating acitivies?

A

net income
+ depreciation expense
+losses
- gains
+ decrease in current operating assets
- increase in current operating assets
- decrease in current operating liabilities
+ increase in current operating liabilities
—————————————————————
net operating cash flow

118
Q

what does vertical analysis do

A

compares line items on a financial statement to each other as a % (making it possible to compare companies of different sizes)
- divide by total sales for income statement
- divide by total assets for balance sheet

119
Q

what does horizontal analysis do

A

looks at trends for one company over time (what was the percent change of COGS from 2014 to 2015)

% change= year 2-year 1/ year 1

120
Q

which ratios do you want a lower number for

A

average collection period (want to collect AR quickly)
average days in inventory (want to sell inventory quickly)
debt to equity ratio (want liabilities to be smaller compared to SE)

121
Q

issued stock

A

number of shares that have been sold to investors

122
Q

outstanding stock

A

number of issued shares held by investors

123
Q

authorized stock

A

total number of shares available to sell

accounting (4 decks)

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