f3 Flashcards
(31 cards)
Cash equivalents must mature within
3 months from the purchase date.
cash equivalents include:
- money market
-treasury bill maturing in 3 moths or less
-certificate of deposit due in 3 moths or less
-bank draft - commercial paper within 3 months
these are just some not ALL
when recording net sales revenue you should
deduct the amount estimated for sales returns associated
B.A.S.E for ARO
B- Beginning balance
A- additions: recoveries
S- Subtract: write offs
E- ending balance
Then plus for the exp
uncollectible allowance is a
plug account
with recourse vs. without recourse
with recourse- risk is with compnay who sold a/r
without recourse- risk transfers to company who bought aa/r
the discount rate on a note receivable is always applied
less the maturity value
How to calculate COGS when given sales amount?
COGS = Sales / 1 + markup
land cost include
The costs of getting the land ready for intended use including removing old buildings less salvage plus title insurance and legal fees
inventorial cost include
any cost that are required to get the inventory ready to sell
ending inventory includes
goods on hand and goods in trasnit depending on shipping terms
double declining rate is calculated by
1/n * 200%
n=time period ex: 10 year
=1/10*200%
depletion base =
purchase price + developmental costs + estimated resoration costs - expected salvage value
net realizable value =
selling price - costs to complete and sell
The consignor is:
“the seller” owns the goods so should include in inventory
the consignee
holds and sells the goods on the consignors behalf
sum-of-the-years-digits depreciation method
accelerated methods of depreciation that provides higher depreciation expense in early years and lower charges in later years
sum-of-the-years-digit calculation
each year is numbered and then added
ex:
5 year useful life
1+2+3+4+5=15
then the depreciation calculation is
= (cost - salvage value) x remaining life of the asset / sum-of-the-years-digits
market ceiling
an items net selling price less the costs to complete and dispose (NRV)
market floor
market ceiling less a normal profit margin
when computing lower of cost or market rule may be applied to
a single item, a category or total inventory
You should expense ordinary repairs but capitalize:
expenditures which are additions, benefit several period
improve efficiency etc
Are debt issuance costs included in expenditures?
No
an old building being actively marketed for sale will be valued
at the lower of its book value or net relizable value which is the fair value less cost to sell
