Final Exam Review

Question 1

What is a T-Account

Answer 1

Summary of all transactions in each account
-All T-Accounts are summarized in the General Ledger

Question 2

EPS equation

Answer 2

(Net Income - Preferred Dividends) / Weighted Average # of Common Shares Outstanding

Question 3

Is EPS required to be disclosed on the face of the Income Statement

Answer 3

Yes

Question 4

Gross Sales

Answer 4

Sales before applying discounts

Question 5

Net Sales formula

Answer 5

Gross Sales - Discounts
Discounts = Credit Card, Cash, Return

Question 6

Allowance For Doubtful Accounts (AFDA) 2 equations?

Answer 6

1) Credit Sales x Bad Debt Rate
2) AFDA bb + Bad Debt Expense - Write Offs

Question 7

What type of account is an AFDA Account

Answer 7

Permanent Contra Asset Account

Question 8

Inventory/COGS full equation

Answer 8

Beginning Inventory + Purchases = Cost of goods available for sale - Ending Inventory = Cost of Goods Sold

Question 9

What are the 4 Inventory Costing Methods?

Answer 9

1) Specific Identification
2) Average Cost
3) LIFO
4) FIFO

Question 10

Formula for Average Cost Inventory Method

Answer 10

COGAS / Total Unites Available For Sale = Average Price
-Average Price x EI

Question 11

What are the 3 depreciation methods?

Answer 11

1) Units of Production
2) Straight Line
3) Double Declining

Question 12

Units of Production Depreciation Equation

Answer 12

((Cost - Salvage Value) / Estimated # of units produced ) x units actually produced

Question 13

Intangible Assets

Answer 13

Assets with no physical features
-Either definite or indefinite life

Question 14

Definite Life Intangible Asset

Answer 14

Will end at some point
-Amortized on a straight line bases
-Ex: Patent

Question 15

Indefinite Life Intangible Asset

Answer 15

Will not end
-Not Amortized but tested for impairment yearly
-Ex: Goodwill

Question 16

What are the 3 Current Liabilities

Answer 16

1) Accounts Payable
2) Accrued Liabilities
3) Unearned Revenue

Question 17

AP Turnover Equation

Answer 17

COGS / Average AP

Question 18

Average days to pay AP equation

Answer 18

365/ AP Turnover

Question 19

Steps for Solving TVM Problems:

Answer 19

1) Solving for PV/FV of 1 or Annuity
2) Calculate I and N
3) Find PV/FV factor or use excel
4) Multiply invest $ x factor

Question 20

Bond @ Premium

Answer 20

-Market Rate < Stated Rate
-We get more money

Question 21

Bond @ Par

Answer 21

-Market Rate = Stated Rate
-Equal amount of money

Question 22

Bond @ Discount

Answer 22

-Market Rate > Stated Rate
-We get less money

Question 23

Premium Bond Issuance JE

Answer 23

Cash(+A)
Bonds Payable(+L)
Premium on BP (+L)

Question 24

Stockholders Equity Equation

Answer 24

Contributed Capital + Retained Earnings Ending

Question 25

Authorized Shares

Answer 25

Maximum number of shares a company is allowed to issue

Question 25

Contributed Capital is made up of what?

Answer 25

Common Stock Preferred Stock Treasury Stock (Negative Number)

Question 26

Outstanding Shares

Answer 26

Total number of shares held by stockholders

Question 27

Treasury Shares

Answer 27

Shares of a stock that the company had re purchased -decrease to CC -XSE account -No voting rights

Question 28

Issued Shares Equation

Answer 28

Outstanding + Treasury

Question 29

AICPA

Answer 29

Supports FASB with development of GAAP

Question 30

PCAOB

Answer 30

Oversees Accounting Professionals who audit publicly traded companies

Question 31

3 Conditions for fraud to occur

Answer 31

1) Incentive 2) Opportunity 3) Rationalization

Question 32

Statement of Cash flows is made up of what?

Answer 32

Operating Investing Financing Activities

Question 33

Operating Activities is what?

Answer 33

Net Income Daily operations (AP, AR, Gains/Losses, Expenses)

Question 34

Investing Activities is what?

Answer 34

Sale or purchase of PP&E When we invest in others (ST or LT Investments)

Question 35

Financing Activities are what?

Answer 35

When others invest in us

Question 36

Quality of Income Ratio:

Answer 36

Cash flow from operating activities/ net income

Question 37

Net Profit Margin Equation

Answer 37

Net Income / Net Sales

Question 38

Return on Equity Equation

Answer 38

(Net Profit Margin x Total Asset TO x Financial Leverage) (Net Income / Total SE)

Question 39

Quick Ratio

Answer 39

(Cash/Cash Equiv + ST Investment + Net AR) / Current Liabilities

Question 40

Debt to Equity Ratio

Answer 40

Total Liabilities / Total Stockholders Equity

Question 41

JE of Prepaid Account

Answer 41

Prepaid Asset (+A) Cash (-A)

Question 42

Net AR equation

Answer 42

AReb - AFDAeb

Question 43

JE of Depreciation Expense

Answer 43

Depreciation Expense (+E,-SE) Accumulated Depreciation(+XA)