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MBA Financial Reporting > Final Exam Calculations and Journal Entries > Flashcards

Final Exam Calculations and Journal Entries Flashcards

1
Q

Describe a t-account for current liabilities

A

Start with begging balance (C)
cash payments (D)
purchases (C)

Final: Ending Balance

(C) - credit
(D) - debit

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2
Q

Inventory Equation

A

begging inventory + purchases = ending inventory + COGS

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3
Q

In re balance decline depreciation,

Depreciable Cost equation

A

Depreciable cost = Cost - Residual value

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4
Q

Journal Entry:

to record depreciation

A

depreciation expense - (D)
accumulated depreciation - (C)

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5
Q

Journal Entry:

for a gift certificate/ AP (current liability)

A

cash - (D)
Unearned Rev - (C)

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6
Q

Journal Entry:

for redemption of gift certificate or prepaid good/service

A

Unearned Rev - (D)
Rev - (C)

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7
Q

BV of longterm assets equation

A

BV = PPE @ cost less accumulated depreciation

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8
Q

Depreciation equation,

straight line method

A

Dep. Ex = (cost - residual value)/useful life

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9
Q

Depreciation equation,

declining balance method

A

dep. ex. = beginning BV * (multiple of 1/useful life)

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10
Q

Depreciation equation,

units of production
(activity method)

A

dep. ex = (cost - residual value) * (units produced this year/estimated total units)

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11
Q

Describe a t-account for unearned revenue

A

Start with begging balance (C)
redemptions (revenue earned) (D)
cash received (C)

Final: Ending Balance

make sure to watch out for begging and ending values

(C) - credit
(D) - debit

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12
Q

how to compute a t account with missing a missing value

A

either ending balance - numerator OR

numerator - ending balance

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13
Q

From the SW problem in current liabilities, why could SW not recognize revenue when it received payments from its customers?

A

Revenue is earned when the service is provided, cash advances before the service is provided is unearned revenue (liability). Here, the service is provided when the customer flies.

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14
Q

From the SW problem in current liabilities, why is the air traffic liability a current liability?

A

This is a current liablitiy because the liablilty will be fulfilled wihtin 1 year. (Generally, obligation is fulfilled wihtin 1 year because tickets are purchased with the intent to fly within a few months (or under 1 year)).

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15
Q

what type of sales can be made?

A

cash

accounts receivable

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16
Q

Journal Entry:

for sale of inventory

A

cash - (D)
inventory - (C)

be mindful that you may have to compute the aggregated amount for the journal entry: units * price = Total inventory sold*

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17
Q

Journal Entry:

for contingent loss on warranties

A

warranty expense - (D)
warranty liablility - (C)

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18
Q

Journal Entry:

for actual cost on warranties

A

warranty liability - (D)
cash - (C)

** be mindful that there may be more than 1 accounting period asked to make a journal entry for, account accordingly.**

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19
Q

Things that you need to know for a bond issuance problem?
(4)

A

-periods
-par value
-(annual) coupon rate (effective rate)
-required rate

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20
Q

what does it mean if bond issued at a discount?

A

bond issued for LESS than required rate

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21
Q

what does it mean if bond issued at a premium?

A

bond issued for MORE than required rate

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22
Q

Journal Entry:

bond issued on discount

A

cash - (D)
discount - (D)
bonds payable - (C)

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23
Q

Journal Entry:

bond issued on premium

A

cash - (D)
bonds payable - (C)
premium - (C)

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24
Q

Journal Entry:

re bonds,

interest expense with premium

A

interest expense - (D)
bond premium - (D)
cash - (C)

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25
Q

how to determine how much a bond was issued for?

A

PV annuity + PV single = bond issuance amount

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26
Q

Journal Entry:

re bonds,

interest expense with discount

A

interest expense - (D)
cash - (C)
bond discount - (C)

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27
Q

how to compute PV annuity

A

period payment * period effective rate = PV annuity

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28
Q

how to compute PV single

A

par value * period effective rate = PV single

29
Q

for bond issuance,

interest expense equation

A

interest expense = beginning borrowing * effective rate

30
Q

re bond journal entry,

after recording this entry what value remains and what happens to it?

A

the carrying value is updated

and moves closer to the bar value.

31
Q

Journal Entry:

(bond accounting)

interest expense w/ discount

A

interest expense - (D)
cash - (C)
DISCOUNT - (C)

32
Q

Journal Entry:

(bond accounting)

interest expense w/ premium

A

interest expense - (D)
PREMIUM - (D)
cash - (C)

33
Q

when computing and applying a bond expense (with discount), what 3 areas are impacted?

A

-bonds payable account (at maturity)
-discount account
-balance sheet

34
Q

How is a bond accounted on the BS?

A

bond payable
Add: premium
Less: discount
=
BV of the bond

35
Q

in bond issuance, what two amounts are the SAME?

A

the BV (on BS) and the present value

36
Q

Journal Entry:

bond maturity

A

bond payable - (D) (par value)
cash - (C)

37
Q

Journal Entry:

authorizing shares to issue

A

no journal entry

38
Q

Journal Entries:

issuing common stock

with exceeding and without par value

A

cash - (D)
common stock - (C) (cap if par value)
additional paid in capital, common stock - (C)

39
Q

Journal Entries:

issuing preferred stock

(with exceeding and witout exceeding par value)

A

cash - (D)
preferred stock - (C) (cap if par value)
additional paid in capital, preferred stock - (C)

40
Q

Journal Entry:

issuing no par preferred stock

A

cash - (D)
preferred stock - (C)

41
Q

Journal Entry:

buy-back of stock for treasury stock

A

treasury stock - (D)
cash - (C)

42
Q

Journal Entry:

re-issuance (after buy-back) of stock for treasury stock

For gain and a loss

A

cash - (D)
any loss1: Additional paid in capital, TS - (D)
any loss2: Retained Earnings, TS - (D)
treasury stock (w/ our cost of the TS) - (C)
any gain: Additional paid in capital, TS - (C)

43
Q

on the BS, what makes up SE?

A

-(auth) common stock
-(auth) preferred stock
-additional paid in capital
-retained earnings
-Less: Treasury stock

44
Q

Journal Entry:

sold treasury shares on the open market

(if there was a gain on the sale).

A

cash - (D)
treasury stock - (C)
additional paid in capital, treasury stock - (C) (gain)

45
Q

Journal Entry:

issuing treasury shares for executives who exercised stock options (and deplete) additional paid in capital account

A

cash - (D)
additional paid in capital, treasury stock - (D)
retained earnings - (D)
treasury stock - (C)

46
Q

outstanding shares equation

A

outstanding shares = authorized shares - treasury shares

47
Q

when a stock account has been depleted or receives additional money, where does the remainder go or come from?

A

additional paid in capital account

eg. APC, CS ;
APC, PS; or
APC, TS

48
Q

Journal Entry:

stock dividend payment

(if the dividend was less than 25%)

A

stock dividend - (D)
common stock - (C)
additional paid in capital - (C)

49
Q

for cash dividend,

dividend amount equation

A

dividend amount = outstanding shares * dividend per share

50
Q

Journal Entry:

dividend declaration date

A

cash dividend (dividends declared) - (D)
dividend payables - (C)

51
Q

Journal Entry:

dividend record date

A

no entry

52
Q

Journal Entry:

dividend payment date

at par value

A

dividend payables - (D)
cash - (C)

53
Q

Journal Entry:

common stock dividend,
that exceeds par value

A

stock dividend (dividends declared) - (D)
common stock - (C)
APC, CS - (C)

54
Q

why would a percent stock dividend be attractive to some shareholders?

Why would a company issue it any way?

A

They may not like this because it impacts retained earnings, and reducting it by $25000. This constrains the ability issue cash dividends in the near future. Companies do this because mamagers like to say that they have been issuing dividends for a durational amount of time. (double check on this, I’m not 100% understanding him rn).

55
Q

if there was a stock split, what would be impact on the financial statements?

why?

A

There would be no impact on the FS’s.

because the amount is still the same value.

56
Q

What is CFO?

what is the overall CFO equation?

A

cash from operating activities

Net Income
+Depreciation
+Changes in operating working capital
=
CFO

57
Q

re cash flows,

what is the following classification:

AR?

A

asset

58
Q

re cash flows,

what is the following classification:

deferred revenue?

A

liability

59
Q

re cash flows,

what is the following classification:

inventory?

A

asset

60
Q

re cash flows,

what is the following classification:

AP?

A

liability

61
Q

re cash flows,

what is the following classification:

salaries payable?

A

liability

62
Q

re cash flows,

what is the following classification:

prepaid advertising?

A

asset

63
Q

re cash flows,

what is the following classification:

Accumulated depreciation?

A

Depreciable expense

64
Q

What happens to A & L when there is a cash outflow?

A

A - increase

L - decrease

65
Q

What happens to A & L when there is a cash inflow?

A

A - decrease

L-increase

66
Q

re cash flows,

when computing CFO:

how are outflows reflected in the computation?

A

as negatives

67
Q

re cash flows,

how should you set your columns for configuring changes?

A

ending - beginning - change (if neg) - cash flow

68
Q

ending retained earnings equation

A

beginning retained earnings
+net income
- dividends
=
ending retained earnings

69
Q

What is CFO computation process?

A

We start with net income, add non-cash expenses, and adjust for changes in operating working capital to compute CFO.

MBA Financial Reporting (2 decks)

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