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60 Cards in this Set
- Front
- Back
Net realizable value
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receivables appear in the balance sheer at the estimated collectible amount
- what we ultimately expect to get paid |
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Cash over and short
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is debited for shortages and credited with overages
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Cash over and short
Journal entry |
dr. Cash over and short
cr. cash |
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Bank reconciliation
credit memoranda |
added to the balance
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Bank reconciliation
debit memoranda |
subtract from the balance
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Purchase of marketable securities
journal entry |
dr. marketable securities
cr. cash |
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Recognition of investment revenue
journal entry |
dr. cash
cr. dividend revenue |
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Sale of investments- Gain
journal entry |
dr. cash
cr. marketable security cr. gain on sale of investment |
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Sale of investments- Loss
journal entry |
dr. cash
dr. loss on sale of investment cr. marketable security |
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Adjusting marketable securities to market value
journal entry |
dr. unrealized holding loss on investment
cr. marketable securities dr. Marketable securities cr. unrealized holding gain on investments |
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Allowance for doubtful accounts (ADA)
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contra-asset account
- credit balance - increases with a credit |
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Writing off an uncollectable account receivable
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dr. Allowance for doubtful accounts
cr. Accounts receivable |
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Balance sheet approach
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has aging report
dr. Uncollected Accounts Expense (bad debt exp) cr. Allowance for doubtful Accounts |
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Income statement approach
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net credit sales x % estimate of uncollectable = amt of journal entry
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Income statement approach- estimate
journal entry |
dr. Uncollected Account Expense (bad debt exp)
cr. Allowance for doubtful accounts |
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Income statement approach- write -off
journal entry |
dr. Allowance for doubtful accounts
cr. Accounts receivable |
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Income statement approach- recovery
journal entry |
dr. Accounts receivable
cr. Allowance for doubtful accounts dr. Cash cr. Accounts receivable |
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Calculating Interest formula
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Interest= Principal x Rate of interest x time
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Book value
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cost - accumulated depreciation
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Cost formula
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Asset + Reasonable/necessary costs= cost
(getting asset to location & getting it ready for use) |
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Straight-line method
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cost - residual value / years of useful life
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Residual value (salvage value)
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portion of assets cost expected to be recovered through sale or trade-in of the asset at the end of its useful life
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Declining balance method (double declining)
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Depreciation expense = remaining book value x accelerated depreciation rate
- primarily used in income tax returns - can never depreciate more than the cost of the asset |
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Units of out-put (activity) method
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Cost - residual value/ estimated units of out-put= cost per unit out-put
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Disposal of plant & equipment- scrapping
journal entry |
dr. Accumulated depreciation:
cr. equipment |
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Disposal of plant & equipment- above book value
journal entry |
dr. cash
dr. accumulated depreciation: cr. machinery cr. gain on disposal of asset |
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Disposal of plant & equipment- below book value
journal entry |
dr. cash
dr. accumulated depreciation: dr. loss on asset cr. machinery |
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Discount on Bonds Payable Account
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contra-liability account
-increases with a debit -has debit balance |
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Issuing bonds journal entry
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dr. cash
cr. Bonds payable |
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Semiannual interest on bonds journal entry
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dr. Bond interest expense
cr. cash |
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Adjusting entry at year-end (bonds)
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dr. bond interest expense
cr. bond interest payable |
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Interest payment following year-end adjusting entry (bonds)
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dr. bond interest expense
dr. bond interest payable cr. cash |
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Closing bonds at maturity
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dr. bonds payable
cr. cash |
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Bond discount- Issuing JE
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dr. cash
dr. discount on bond payable cr. bond payable |
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Bond discount- record interest expense JE
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dr. bond payable
cr. cash cr. discount on bond payable |
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Bond discount- adjusting entry
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dr. bond interest expense
cr. bond interest payable cr. discount on bond payable |
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Bond discount- semiannual interest payment
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dr. bond interest expense
dr. bond interest payable cr. cash cr. discount on bound payable |
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Bond discount- retirement
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dr. bond payable
cr. cash |
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Bond premium- issuance
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dr. cash
cr. premium on bond payable cr. bond payable |
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Bond premium- interest expense
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dr. bond interest expense
dr. premium on bond payable cr. cash |
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Bond premium- adjusting entry
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dr. bond interest expense
dr. premium on bonds payable cr. bond interest payable |
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bond premium- semiannual interest
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dr. bond interest expense
dr. bond interest payable dr. premium on bond payable cr. cash |
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bond premium- retirement
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dr. bond payable
cr. cash |
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Present value
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-based on time value of money- getting money today is preferable to getting it at a later date
- future cash receipts is the amount that a knowledgeable investor will pay today for the right to get future payments |
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Carrying value of bonds
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Face value + premium=
- premium: gradually decreases toward maturity Face value - discount= - discount: gradually increases toward maturity |
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Payroll- gross wages, employee withholding & employee take-home pay- JE
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dr. wage expense
cr. state income tax payable cr. federal income tax payable cr. SS/Medicare taxes payable cr. cash |
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Employer Payroll tax expense- JE
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dr. Payroll tax expense
cr. SS/Medicare taxes payable cr. Federal/state unemployment taxes payable cr. pre-paid workers' comp insurance |
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Payroll- employee health benefits expenses
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dr. employee health/life insurance
dr. pension fund expense cr. prepaid employee health/life insurance cr. cash/pension benefits payable |
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Bank Reconciliation
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schedule explaining any differences between the balance shown in the bank statement & the balance shown in the depositor's accounting records
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Balance per Bank
(info that goes on bank side) |
+ Deposits in Transit
- Outstanding Checks ± Bank Adjustments |
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Balance per Depositor
(info the goes in the books) |
+ Deposits by Bank
(credit memos) - Service Charge - NSF Checks ± Book Adjustments |
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Per bank credit memoranda- JE
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dr. cash
cr. notes receivable cr. interest revenue |
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Per bank debit memoranda (& correction of error)- JE
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dr. bank service charge
dr. A/R dr. Expense cr. cash |
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Investments sold at a gain (more than the cost)- JE
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dr. cash
cr. marketable securities cr. gain on sale of investment |
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Investment sold at a loss (less than the cost)- JE
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dr. Cash
dr. loss on investment cr. marketable securities |
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Internal Control Over Cash
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-Segregate authorization, custody and recording of cash.
-Prepare a cash budget (or forecast). -Prepare a control listing of cash receipts. -Require daily deposits. -Make all payments by check. -Require that every expenditure be verified before payment. -Promptly reconcile bank statements. |
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Intangible assets
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used in business operation but have no physical form and are non-current
ex. patents, copyrights, trademarks, franchises & goodwill |
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Difference between 150 & 200 declining balance method
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150% - of the straight-line method- uses 30%
200%- of straight-line method- uses 40% |
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Capital expenditures
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expenditures for the purchase or expansion of plant assets and are recorded in asset account
|
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Computing costs- land, buildings, equipment- JE
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dr. land
dr. land improvements dr. building dr. equipment cr. cash |