Deck 10 Flashcards Preview

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Flashcards in Deck 10 Deck (19):
1

What factors adjust the bank balance?

Deposits in transit (add) and Outstanding checks (subtract) and errors

2

What factors adjust the book balance?

Service charges (add); bank collections (add); errors; and Non-sufficient funds (subtract); and Interest income (add)

3

Net method vs. gross method for sales/cash discounts:

Net method: Records sales and A/R net of the discount; Gross method: Record sales and A/R without regard to the discount

4

Difference between sales/cash discounts and trade discounts? (Net or gross method used)

Sales/cash discounts: either method; Trade discounts: net method only

5

Expected exchanges vs. sales returns or allowances:

Exchanges: dont affect any accounts; Sales returns/allowances: Decreases A/R and sales

6

Factoring without recourse:

True sale; Sale is final and the assignee (the factor) assumes the risk of any losses

7

Factoring with recourse:

Sale or loan; Factor has an option to re-sell any uncollectible receivables back to the seller

8

In consignment sales, revenue is recognized when:

The goods are sold to a third party

9

The cost of consigned inventory includes:

The cost of inventory plus any costs needed to get the inventory in place for sale (does not include advertising)

10

Current market value of inventory

Recognize a loss on the income statement and recognize a liability for the accrued loss

11

Understatement of ending inventory results in:

Overstatement of COGS, Understatement of RE and net income

12

Calculation for Inventory at Base $ =

Inventory at current $/Price index

13

What method does IFRS use to value inventory?

Lower of cost or net realizable value

14

Journal entry to adjust the security to FV under the cost method (loss):

Dr. Unrealized holding loss; Cr. Investment in investee (switch the entries for a gain)

15

What designation can only be applied to held-to-maturity securities?

Debt (not equity)

16

Consigned goods:

The consignor includes the consigned goods in its inventory (Inventory costs include shipping)

17

Consignor:

The seller

18

Inventory that is not costed using LIFO or retail method should be measured at (for GAAP):

Lower of cost and net realizable value

19

Inventory costed using LIFO or the retail method should be measured at the (for GAAP):

Lower of cost or market