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31 Cards in this Set
- Front
- Back
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Types of accounts for these chapters |
Allowance for doubtful accounts (contra asset) Uncollectible accounts expense (not on balance sheet) |
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Formulas |
A/R Accounts Receivable) Beg Balance + Sales on Acct - Cash collected from Customers - Write-offs ------------------------------------------------ End balance A/R ADA (Allowance for doubtful accounts) Beg Balance + UAE (Uncollectible accounts expense) - Write offs _______________ End balance ADA NRV Net realized value A/R (ADA) --------- NRV Basket Purchase Asset |Appraisal Value / Total Value = Rate * Acquisition cost = Adjusted cost Straight-Line (Cost – Salvage Value) ÷ Useful Life = Annual Depreciation Double-Declining Balance (Cost – Accum. Depreciation at Beginning of Period) × (2 × SL Rate) = Annual Depreciation Units of production ((Cost - SV) / Estimated Units of Production)x Units of production in currents yr = Annual depreciation expense |
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Face value |
Full amount |
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The amount of receivables a company estimates it will actually collect |
Net realized value (NRV) Face value- allowance for doubtful accounts |
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a company's estimate of the amount of uncollectible receivables |
allowance for doubtful accounts |
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3 methods used to determine NRV of |
to avoid overstating assets, companies usually report receivable on their balance sheet as the NRV
known as: Allowance method of accounting for uncollectible accounts Also: Percent of revenue method Also: Percentage of receivables method |
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Have a physical presence: they can be seen and touched |
Tangible Assets |
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Have no physical for: Rights, privileges, patents etc. |
Intangible assets |
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The term used to recognize expense for property, plants and equipment |
Depreciation |
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Mineral Deposits, oil and gas reserves, timber stands, coal mines and stone quarries are examples of |
Natural resources |
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The term used to recognize expense for natural resources |
Depletion |
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The term used when recognizing expense for intangible assets with identifiable useful lives is called |
amortization |
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What is the Historical Cost Concept |
Requires that assets be recorded at the amount paid for it. |
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Relative Fair Market Value Method |
Used with Basket purchases. Asset |Appraisal Value / Total Value = Rate * Acquisition cost = Actual cost |
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The amount of an asset's cost that is allocated to expense during an accounting period |
Depreciation Expense |
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The expected Market Value of a fully depreciated asset is called |
Salvage value
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The total amount of depreciation a company recognizes for an asset |
Depreciable cost |
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3 type of methods used for Depreciating Expense's with assets |
Straight-line (Cost - SV) / Estimated Useful Life Double-declining Yr | Beg BV | Rate (SL rate *2) | Dep Exp | End BV | End A/D Units of production ((Cost - SV) / Estimated Units of Production) x Units of production in currents yr = Annual depreciation expense |
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Because they reduce net income when incurred, accountants often call repair and maintenance cost...(companies subtract them form REV by way of recording and EXP) |
revenue expenditures |
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Substantial amounts spent to improve the quality or extend the life of an asset are described as |
capital expenditures Improves Quality: Increase Machinery Extends Life: increase BV and Acc. Dep. |
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The value attributable to favorable factors such as reputation, location, and superior products |
Goodwill |
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Assets like inventory, office supplies are called |
Current assets |
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Assets like equipment or buildings that are used for an extended period of time |
long-term operational assets
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What is "remitting the tax" mean |
Paying cash to the tax authority |
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Liabilities that mature within on year of a company's operating cycle, whichever is longer |
current liabilities |
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a potential obligation arising from a past event |
contingent liabilities Ex: Pending Lawsuit |
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The classifications of Contingent Liabilities |
Probable and estimable - Recognize in financial Statements Reasonably possible (or probably but not estimable) - Disclose in the footnotes of the financial statements Remote - Need not recognize or disclose |
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All other liabilities in respect to being over a year and have varying requirements for paying interest charges and repaying principle |
Long-term liabilities |
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Repaying a portion of the principle with regular payments that also include interest is often called |
loan amortization |
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Loans that require payments of principal and interest at regular intervals (amortizing loans) are typically represented by |
installment notes |
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Amortization Schedule for Installment notes |
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