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60 Cards in this Set

  • Front
  • Back
Net realizable value
receivables appear in the balance sheer at the estimated collectible amount
- what we ultimately expect to get paid
Cash over and short
is debited for shortages and credited with overages
Cash over and short
Journal entry
dr. Cash over and short
cr. cash
Bank reconciliation
credit memoranda
added to the balance
Bank reconciliation
debit memoranda
subtract from the balance
Purchase of marketable securities
journal entry
dr. marketable securities
cr. cash
Recognition of investment revenue
journal entry
dr. cash
cr. dividend revenue
Sale of investments- Gain
journal entry
dr. cash
cr. marketable security
cr. gain on sale of investment
Sale of investments- Loss
journal entry
dr. cash
dr. loss on sale of investment
cr. marketable security
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
Allowance for doubtful accounts (ADA)
contra-asset account
- credit balance
- increases with a credit
Writing off an uncollectable account receivable
dr. Allowance for doubtful accounts
cr. Accounts receivable
Balance sheet approach
has aging report
dr. Uncollected Accounts Expense (bad debt exp)
cr. Allowance for doubtful Accounts
Income statement approach
net credit sales x % estimate of uncollectable = amt of journal entry
Income statement approach- estimate
journal entry
dr. Uncollected Account Expense (bad debt exp)
cr. Allowance for doubtful accounts
Income statement approach- write -off
journal entry
dr. Allowance for doubtful accounts
cr. Accounts receivable
Income statement approach- recovery
journal entry
dr. Accounts receivable
cr. Allowance for doubtful accounts
dr. Cash
cr. Accounts receivable
Calculating Interest formula
Interest= Principal x Rate of interest x time
Book value
cost - accumulated depreciation
Cost formula
Asset + Reasonable/necessary costs= cost
(getting asset to location & getting it ready for use)
Straight-line method
cost - residual value / years of useful life
Residual value (salvage value)
portion of assets cost expected to be recovered through sale or trade-in of the asset at the end of its useful life
Declining balance method (double declining)
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
Units of out-put (activity) method
Cost - residual value/ estimated units of out-put= cost per unit out-put
Disposal of plant & equipment- scrapping
journal entry
dr. Accumulated depreciation:
cr. equipment
Disposal of plant & equipment- above book value
journal entry
dr. cash
dr. accumulated depreciation:
cr. machinery
cr. gain on disposal of asset
Disposal of plant & equipment- below book value
journal entry
dr. cash
dr. accumulated depreciation:
dr. loss on asset
cr. machinery
Discount on Bonds Payable Account
contra-liability account
-increases with a debit
-has debit balance
Issuing bonds journal entry
dr. cash
cr. Bonds payable
Semiannual interest on bonds journal entry
dr. Bond interest expense
cr. cash
Adjusting entry at year-end (bonds)
dr. bond interest expense
cr. bond interest payable
Interest payment following year-end adjusting entry (bonds)
dr. bond interest expense
dr. bond interest payable
cr. cash
Closing bonds at maturity
dr. bonds payable
cr. cash
Bond discount- Issuing JE
dr. cash
dr. discount on bond payable
cr. bond payable
Bond discount- record interest expense JE
dr. bond payable
cr. cash
cr. discount on bond payable
Bond discount- adjusting entry
dr. bond interest expense
cr. bond interest payable
cr. discount on bond payable
Bond discount- semiannual interest payment
dr. bond interest expense
dr. bond interest payable
cr. cash
cr. discount on bound payable
Bond discount- retirement
dr. bond payable
cr. cash
Bond premium- issuance
dr. cash
cr. premium on bond payable
cr. bond payable
Bond premium- interest expense
dr. bond interest expense
dr. premium on bond payable
cr. cash
Bond premium- adjusting entry
dr. bond interest expense
dr. premium on bonds payable
cr. bond interest payable
bond premium- semiannual interest
dr. bond interest expense
dr. bond interest payable
dr. premium on bond payable
cr. cash
bond premium- retirement
dr. bond payable
cr. cash
Present value
-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
Carrying value of bonds
Face value + premium=
- premium: gradually decreases toward maturity
Face value - discount=
- discount: gradually increases toward maturity
Payroll- gross wages, employee withholding & employee take-home pay- JE
dr. wage expense
cr. state income tax payable
cr. federal income tax payable
cr. SS/Medicare taxes payable
cr. cash
Employer Payroll tax expense- JE
dr. Payroll tax expense
cr. SS/Medicare taxes payable
cr. Federal/state unemployment taxes payable
cr. pre-paid workers' comp insurance
Payroll- employee health benefits expenses
dr. employee health/life insurance
dr. pension fund expense
cr. prepaid employee health/life insurance
cr. cash/pension benefits payable
Bank Reconciliation
schedule explaining any differences between the balance shown in the bank statement & the balance shown in the depositor's accounting records
Balance per Bank
(info that goes on bank side)
+ Deposits in Transit
- Outstanding Checks
± Bank Adjustments
Balance per Depositor
(info the goes in the books)
+ Deposits by Bank
(credit memos)
- Service Charge
- NSF Checks
± Book Adjustments
Per bank credit memoranda- JE
dr. cash
cr. notes receivable
cr. interest revenue
Per bank debit memoranda (& correction of error)- JE
dr. bank service charge
dr. A/R
dr. Expense
cr. cash
Investments sold at a gain (more than the cost)- JE
dr. cash
cr. marketable securities
cr. gain on sale of investment
Investment sold at a loss (less than the cost)- JE
dr. Cash
dr. loss on investment
cr. marketable securities
Internal Control Over Cash
-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.
Intangible assets
used in business operation but have no physical form and are non-current
ex. patents, copyrights, trademarks, franchises & goodwill
Difference between 150 & 200 declining balance method
150% - of the straight-line method- uses 30%
200%- of straight-line method- uses 40%
Capital expenditures
expenditures for the purchase or expansion of plant assets and are recorded in asset account
Computing costs- land, buildings, equipment- JE
dr. land
dr. land improvements
dr. building
dr. equipment
cr. cash