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Flashcards in Notebook Deck (15):
1

How Do you use the BASE method when determining items in AR?

Beginning AR + Purchases + Sales - Cash Collections - Write Off's _______________ Ending AR

2

What is the entry to recognize Bad Debt Expense?

Bad Debt Expense Allowance for Uncollectible

3

What is the entry to account for the recovery of accounts written off?

AR Allowance for Uncollectible Cash AR

4

What is the JE when interest is accured?

Interest Receiveable

    Interest Income

5

What liability exists for 

Factoring with Recourse?

The maturity or face value amount is the contingent liability and needs to be disclosed in the financial statements.

6

What is a factor's holdback?

Accounts for the proceeds retained by the factor to cover the below:

  1. sales discounts 
  2. sales returns
  3. sales allowances.

7

What is the journal entry for 

Factoring without recourse?

Cash

Factor's Holdback

         AR

*Plug loss or gain accordingly

8

What is the Interest Method?

Recognizes interest revenue each year until the note is collected because estimated future cash flows to be received include interest.

9

What is inventory?

Always considered a current asset.

Valued at lower of 

1) Cost

OR

2) Market

10

How do you calculate

COGS?

Beginning Inventory + Net Purchases

= Goods Available for Sale

 

Goods Avalable for Sale — COGS

= Ending Inventory

 

*To isolate COGS, just calculate GAFS — Ending Inv.

11

How do you calculate Net Purchases?

Gross Purchases =

+ Freight In

- Purchase returns and allowances

- Purchase Discounts

12

Whe prices are rising, 

what is the effect of FIFO?

  1. - Lowest COGS
  2. ⁃ Highest Net income
  3. ⁃ Highest Ending Inventory

13

When prices are rising,

what is the effect of LIFO?

  1. Highest COGS
  2. ⁃ Lowest NI
  3. ⁃ Lowest Ending Inventory

14

What is 

Freight Out?

Freight Out is a 

Selling Expense

15

What factor does the

Timing of Sale

play in Periodic LIFO Inventory?

Timing of Sale is irrelevant for

Periodic LIFO.

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