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Accounting Test > Accounting Test 2 > Flashcards

Accounting Test 2 Flashcards

1
Q

Current Ratio for Liquidity

A

current assets ÷ current liabilities

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2
Q

Acid-Test Ratio for Liquidity

A

(cash + short term investments + A/R) ÷ current liabilities

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3
Q

Solvency Ratio

A

Total Liabilities ÷ Total Assets

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4
Q

Debt to Equity Ratio

A

Total Liabilities ÷ Owner’s Equity

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5
Q

Another name for Solvency Ratios

A

Financial Leverage Ratios

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6
Q

Profitability Ratio: Return on Assets

A

Net Income ÷ Average Total Assets

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7
Q

Profitability Ratio: Return on Owners’ Equity

A

Net Income ÷ Average Total Owners’ Equity

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8
Q

Another name for Turnover Ratios

A

Efficiency Ratios

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9
Q

Turnover Ratio: Total Asset Turnover

A

Sales (or Revenue) ÷ Total Assets

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10
Q

Turnover Ratio: Receivables Turnover

A

Sales (or Revenue) ÷ Average Gross Accounts Receiveable

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11
Q

Turnover Ratio: Inventory Turnover

A

Cost of Goods Sold (COGS) ÷ Average Inventory

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12
Q

Nominal Scales

A

Classification of things that belong to the same group but no rhyme or reason to why they’re in that group. They just are. EX: Football Jerseys

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13
Q

Ordinal Scales

A

Rank orders of items; no set difference between points on the scale (can be arbitrary based on who is doing the ranking). EX: Likert scale, 1-5 rankings for teacher, movies, anything

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14
Q

Interval Scales

A

Ranking scale where the space between numbers/scale points is known and unchanging. EX: Temperature Celsius

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15
Q

Ratio Scales

A

Ranking scale where the space between numbers/scale points is known and unchanging, AND there is a natural zero point. EX: Use of dollars ($) for representing cost or value.

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16
Q

Step 1 of Calculation for Bad Debt Expense: Percentage of Credit Sales Approach

A

1) Determine appropriate percentage of bad debts based on prior periods’ experiences. 2) Perform calculation: (est. % of bad debt expenses) x (Gross A/R @ Period’s End)
3) Create journal entries:
Debit Bad Debt Expense
Credit Allowance for Uncollectable Accounts

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17
Q

Step 2 of Calculation for Bad Debt Expense: Percentage of Receivables Approach

A

1) Do the Step 1 Calculation: (est. % of bad debt expenses) x (Gross A/R @ Period’s End)
2) Subtract Unadjusted Allowance Account Balance from first calculation: [(est. % of bad debt expenses) x (Gross A/R @ Period’s End)] - Unadjusted Allowance Account Balance
3) Create Journal Entries
Debit Bad Debt Expense
Credit Allowance for Uncollectable Accounts

18
Q

Reverse an earlier write-off

A

Debit A/R

Credit Allowance for Uncollectable Accounts

19
Q

Record the collection of cash

A

Debit Cash

Credit A/R

20
Q

Lowest Cost of Goods Sold

A

FIFO

21
Q

Highest Cost of Goods Sold

A

LIFO

22
Q

Highest Gross Profit

A

FIFO

23
Q

Lowest Gross Profit

A

LIFO

24
Q

Highest Ending Inventory

A

FIFO

25
Q

Lowest Ending Inventory

A

LIFO

26
Q

FOB Shipping Point

A

Buyer takes ownership of items upon shipment (when they leave the Seller’s hands)

27
Q

FOB Destination Shipping

A

Seller owns the items until they are in the buyers hands (i.e., delivered safely)

28
Q

Which Inventory System using a purchasing account?

A

Periodic

29
Q

When is cost of goods sold recorded unter Perpetual Inventory Systems?

A

End of the Year

30
Q

True/False: A physical count of items is required in a periodic inventory system

A

True.

31
Q

True/False: A physical count of items is required in a perpetual inventory system

A

False, though counting isn’t a bad idea.

32
Q

How is land reported?

A

Land is a non-depreciable asset and is usually reported at-cost

33
Q

Define “Depreciation”

A

Depreciation is a process of cost allocation, NOT of market valuation.

34
Q

True/False - Straightline Deprecation is the most popular form of deprecation used.

A

False, Double-Declining is the most popular

35
Q

When selling a plant asset: IF PR>BV, then

A

A gain is reported

36
Q

When selling a plant asset, IF PR

A

A loss is reported

37
Q

When selling a plant asset, IF PR=BV, then

A

No gain or loss is reported (neutral)

38
Q

What is the book value?

A

Original cost less accumulated depreciation

39
Q

In two-column bank reconciliation, in what column do bank statement adjustments go?

A

Left

40
Q

In two-column bank reconciliation, in what column do cash balance adjustments go?

A

Right

Accounting Test (2 decks)

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