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exam 2 - Flashcards

Flashcard Deck Information

Class:ACCT 2010 - Accounting Principles
Subject:Accounting
University:Southern Utah University
Term:Fall Semester 2012
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      Mode:   CARDS LIST       ? pages   PRINT EXIT
what is the formula for calculating interest on a note? face amount X annual rate X
what is the net realizable value? gross accounts receivable less allowance for doubtful accounts
sales to customers in which the customer pays within 30-60 days are called? credit sales
sales on account
How do u do a journal entry for allowance for doubtful accounts? accrual basis only bad debt allowance                                1000
     allowance from collectible accounts           1000
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direct write off method (journal entry) cash basis only Bad debt expense              1000
     accounts receivable                   1000
% of receivables computed by balance in accounts receivable X %
net realizable value Accounts receivable - allowance for doubtful accounts
reinstatement journal entry reinstate right off that has been paid back

accounts receivable                                       1000
         allowance for uncollectable accounts              1000

cash                                                              1000
           accounts receivable                                     1000
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FIFO first in first out. 
FIFO ending inventory number of units not sold X unit cost

FIFO cost of goods sold # units sold X all unit cost added together
LIFO last in first out
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LIFO ending inventory # of units not sold X unit cost (last in)
LIFO cost of goods sold # of units sold X unity cost added together
WEighted average unit cost the cost of goods available for sale / number of units available for sale

weighted average ending inventory # of units not sold X weighted average cost
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weighted average cost of goods sold number of units sold X weighted average cost
straight line depreciation asset cost- residual value / service life
double declining balance (year/ useful life)2 X book value
average cost cost - salvage value/ total estimated units of production
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journal entry for depreciation debit depreciation expense
credit accumulated depreciation
Goodwill represents the value of a company as a whole, over and above it's identifiable net assets (remaining value needed to make debits = credits
Return on Assets net income / average total assets

Profit Margin % net income/ net sales

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Asset Turnover Net sales / Average Total Assets
GAIN Cash Recieved Sales > Book Value 

LOSS Sale Price < Book Value
LOSS Journal Entry for Sale of Asset Cash                                        $
Accumulation Depreciation      $
Loss                                         $
                    Equipment                                 $
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GAIN Calculated by sale Price - Book Value 

employer taxes social securtiy- up to 110,100
medicare- unlimited
Fed unemployment- up to 7,000
state unemployment- up to 28,600
workers comp- unlimited
employee taxes social security up to 110,100
medicare- unlimited
fed income tax and state income tax- W4

Contingent Liability probable- payment is likely to occur and there is a reasonable estimate or payment disclose a note and recod and amount

possible- payment is less likely to occur than probable but more likely than remote disclose a note

remote- payment unlikely to occur no disclosure or recording
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employee tax, journal entry salaries and wage expense    400
      social security payable                    16.8
      medicare payable                             5.8
      fed tax payable                                4.8
      state tax payable                             20
      salaries and wages payable            309,  40

recording a contingent liability debit loss
credit contingent liablility
warranties warranty expense           45
        warranty liablity                 45
 
when a customer makes a claim

warranty liability                  12
        cash                                    12
payment of notes and interest notes payable             100,000
interest expense         1,000
interest payable           2,000
          cash                                               103,000
(pay notes payable and interest)

   
Generated by Koofers.com
interest interest= face value X interst rate X fraction of the year

interest expense                2,000
        interest payable                       2,000

(100,000 X 6% x 4/12)
Notes payable liability
debit cash
credit notes payable

natural resources and depletion oil, gas, iron copper, plant asset

depletion/unit=
        (cost-salvage)/ estimated total units of resource

depletion expense=
       depletion/unit X units extracted in period

asset retirement whent the asset is no longer useful and can't be sold
Generated by Koofers.com
selling a long-term asset- gain or loss bring depreciation up to date
remove from books 
          credit original cost
          debit depreciaiton
record own made from sale
determine difference between total debits and credits
                                                                   gain
acc depp                                               sales price > book value (rev)   
cash                                                           loss
loss                                                sales price < book value (expense)
        equip
plant assets tangible assets
cost of a plant asset is the purchase price plus any cost incurred on it before it is put into its intended use
tangible assets vs. intangible assets tangible- things u can track. Plant, property, and equipment

intangible- things not physical in nature. Patent, trademark, goodwill
multiple step income statement (operating Income) sales rev- cost of goods sold =gross profit
-selling expense- general and admistrative expenses=
operating income= non operating rev- non operating expense=
income before taxes
- tax expense=
net income
Generated by Koofers.com
gross profit ratio gross profit ratio= gross profit= net sales
inventory turnover ratio cogs/ average inventory
net sales and gross profit sales revenje less sales discount sales returns and allowances

equals net sales
less cost of goods sold
equals gross profit
perpetual inventory continual 
cash                100
      sales rev          100

cost of goods sold       100
        inventory                       100

keeps track of everything that impacts inventory
Generated by Koofers.com
asset turnover net sales / average total assets
Generated by Koofers.com

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 what is the formula for calculating interest on a note?face amount X annual rate X
 what is the net realizable value?gross accounts receivable less allowance for doubtful accounts
 sales to customers in which the customer pays within 30-60 days are called?credit sales
sales on account
 How do u do a journal entry for allowance for doubtful accounts? accrual basis onlybad debt allowance                                1000
     allowance from collectible accounts           1000
 direct write off method (journal entry) cash basis onlyBad debt expense              1000
     accounts receivable                   1000
 % of receivablescomputed by balance in accounts receivable X %
 net realizable valueAccounts receivable - allowance for doubtful accounts
 reinstatement journal entryreinstate right off that has been paid back

accounts receivable                                       1000
         allowance for uncollectable accounts              1000

cash                                                              1000
           accounts receivable                                     1000
 FIFOfirst in first out. 
 FIFO ending inventorynumber of units not sold X unit cost

 FIFO cost of goods sold# units sold X all unit cost added together
 LIFOlast in first out
 LIFO ending inventory# of units not sold X unit cost (last in)
 LIFO cost of goods sold# of units sold X unity cost added together
 WEighted average unit costthe cost of goods available for sale / number of units available for sale

 weighted average ending inventory# of units not sold X weighted average cost
 weighted average cost of goods soldnumber of units sold X weighted average cost
 straight line depreciationasset cost- residual value / service life
 double declining balance(year/ useful life)2 X book value
 average costcost - salvage value/ total estimated units of production
 journal entry for depreciationdebit depreciation expense
credit accumulated depreciation
 Goodwillrepresents the value of a company as a whole, over and above it's identifiable net assets (remaining value needed to make debits = credits
 Return on Assetsnet income / average total assets

 Profit Margin %net income/ net sales

 Asset TurnoverNet sales / Average Total Assets
 GAINCash Recieved Sales > Book Value 

 LOSSSale Price < Book Value
 LOSS Journal Entry for Sale of AssetCash                                        $
Accumulation Depreciation      $
Loss                                         $
                    Equipment                                 $
 GAINCalculated by sale Price - Book Value 

 employer taxessocial securtiy- up to 110,100
medicare- unlimited
Fed unemployment- up to 7,000
state unemployment- up to 28,600
workers comp- unlimited
 employee taxessocial security up to 110,100
medicare- unlimited
fed income tax and state income tax- W4

 Contingent Liabilityprobable- payment is likely to occur and there is a reasonable estimate or payment disclose a note and recod and amount

possible- payment is less likely to occur than probable but more likely than remote disclose a note

remote- payment unlikely to occur no disclosure or recording
 employee tax, journal entrysalaries and wage expense    400
      social security payable                    16.8
      medicare payable                             5.8
      fed tax payable                                4.8
      state tax payable                             20
      salaries and wages payable            309,  40

 recording a contingent liabilitydebit loss
credit contingent liablility
 warrantieswarranty expense           45
        warranty liablity                 45
 
when a customer makes a claim

warranty liability                  12
        cash                                    12
 payment of notes and interestnotes payable             100,000
interest expense         1,000
interest payable           2,000
          cash                                               103,000
(pay notes payable and interest)

   
 interestinterest= face value X interst rate X fraction of the year

interest expense                2,000
        interest payable                       2,000

(100,000 X 6% x 4/12)
 Notes payableliability
debit cash
credit notes payable

 natural resources and depletionoil, gas, iron copper, plant asset

depletion/unit=
        (cost-salvage)/ estimated total units of resource

depletion expense=
       depletion/unit X units extracted in period

 asset retirementwhent the asset is no longer useful and can't be sold
 selling a long-term asset- gain or lossbring depreciation up to date
remove from books 
          credit original cost
          debit depreciaiton
record own made from sale
determine difference between total debits and credits
                                                                   gain
acc depp                                               sales price > book value (rev)   
cash                                                           loss
loss                                                sales price < book value (expense)
        equip
 plant assetstangible assets
cost of a plant asset is the purchase price plus any cost incurred on it before it is put into its intended use
 tangible assets vs. intangible assetstangible- things u can track. Plant, property, and equipment

intangible- things not physical in nature. Patent, trademark, goodwill
 multiple step income statement (operating Income)sales rev- cost of goods sold =gross profit
-selling expense- general and admistrative expenses=
operating income= non operating rev- non operating expense=
income before taxes
- tax expense=
net income
 gross profit ratiogross profit ratio= gross profit= net sales
 inventory turnover ratiocogs/ average inventory
 net sales and gross profitsales revenje less sales discount sales returns and allowances

equals net sales
less cost of goods sold
equals gross profit
 perpetual inventorycontinual 
cash                100
      sales rev          100

cost of goods sold       100
        inventory                       100

keeps track of everything that impacts inventory
 asset turnovernet sales / average total assets
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