Acct 2206

Front 1

Information provides predictive value when:

Back 1

It helps users make predictions about the final outcome of past, present, and future events. A

Front 2

Accounting is representationally faithful when:

Back 2

The accounting informations faithfully reflects the underlying economic substance of an event or transaction.

Front 3

Name the four enhancing qualitative characteristics

Back 3

Comparability, verifiability, timeliness, and inderstandability

Front 4

To be relevant, accounting information must be capable of:

Back 4

Making a difference in a decision

Front 5

Both ____ and ____ must be present for financial statement information to be useful.

Back 5

Relevance and Representational Faithfulness

Front 6

Verifiability

Back 6

Individual users come to the same results given the financial information provided

Hint 6

Cash balances checked at the bank

Front 7

Understandability

Back 7

Information is of sufficient quality and clarity that it allows reasonably informed users to see its significance.

Front 8

Name 3 quantitative characteristics of Assets

Back 8

-there is economic benefit to the entity

-the entity has control over that benefit

-the benefit results from a past transaction or event

Front 9

Name 3 quantitative characteristics of Assets

Back 9

-there is economic benefit to the entity

-the entity has control over that benefit

-the benefit results from a past transaction or event

Front 10

Gains/Losses represent:

Back 10

Increases/decreases in equity (net assets) from peripheral/incidental transactions

Hint 10

If McDonalds started selling deep fryers

Front 11

The recognition principle is defined when:

Back 11

-the elements meet the definition of an element (asset, liability);

-are probable; and

-are measurable

Front 12

The recognition principle is defined when:

Back 12

-the elements meet the definition of an element (asset, liability);

-are probable; and

-are measurable

Front 13

What is the economic entity principle?

Back 13

Different entities (companies, divisions, or individuals) should report economic activities separately

Front 14

A company falls under the control principle when:

Back 14

1. A company has power over another separate company that it invests in;

2. The company has exposure or rights to returns from a separate company; and

3. The company has the ability to use its power to affect investors returns

Front 15

Accounting attempts to pair the using of assets (expenses) with the revenue that they are helping generate in the same period refers to this principle

Back 15

The matching principle

Front 16

Historical revenue has been recognized when:

Back 16

-risks and rewards have passed, or the earning process is substantially complete;

-the revenue is measurable; and

-collectibility is reasonably assured

Hint 16

Example: Ray mowing Corp. Provided lawn care service in Edmonton; on July 3rd he completed his service for recurring customers and invoices them $1500. Since all 3 criteria are met here, he should recognize the revenue

Front 17

What is the historical cost principle?

Back 17

When transactions are recorded at the price originally received.

Front 18

What is the historical cost principle?

Back 18

When transactions are recorded at the price originally received.

Front 19

What is the difference between the historical cost value and the fair market value principles?

Back 19

Historical costs are recorded from cost at time of purchase, while fair market value expects that the price is re-valued to the cost received.

Hint 19

Example: a house purchased in 2010 for $1 million CAD sold in 2016 for $2 million CAD would be adjusted up for fair market value

Front 20

What is the historical cost principle?

Back 20

When transactions are recorded at the price originally received.

Front 21

What is the difference between the historical cost value and the fair market value principles?

Back 21

Historical costs are recorded from cost at time of purchase, while fair market value expects that the price is re-valued to the cost received.

Hint 21

Example: a house purchased in 2010 for $1 million CAD sold in 2016 for $2 million CAD would be adjusted up for fair market value

Front 22

Periodicity Assumtion

Back 22

Activities/statements are broken down/divided into artificial time periods such as quarters, months, and years.

Front 23

What does the going concern principle assume?

Back 23

That a company will continue to operate for the foreseeable future.

Front 24

Monetary Unit

Back 24

The currency in which a company operates is the most appropriate unit for measurement and analysis of a company's measurement.

Hint 24

Example: A company of Nigeria uses US $ in addition to the Niara to measure operations, as the Niara is currently unstable

Front 25

The full disclosure principle expects that statements are ___ enough to make a difference, but _____ enough to make information understandable.

Back 25

Detailed; condensed.

Front 26

What is the journal entry for recording holding gains?

Back 26

Dr FV-NI/OCI Investments; Cr Unrealized Holding Gain/Loss-OCI

Front 27

Record the journal entries for earned fees of $3,700 which were billed on account.

Back 27

Dr Accounts Receivable @ 3700; Cr Service Revenue @ 3700

Front 28

What are some account examples for expense accounts when closing entries?

Back 28

COGS

~Sales Discounts

~Sales Returns and Allowances

~Admin expenses

~income tax expenses

Front 29

What is the journal entry for services performed but unrecorded at a cost of $7,300?

Back 29

~Dr Accounts Receivable @$7,300;

~~Cr Service Revenue @ $7,300

Front 30

Journal Entry: Equipment is depreciated on a straight-line basis over 10 years. Residual value is $15,000; original cost of equipment is $85,000.

Back 30

Dr Depreciation Expense ($7000);

Cr Accumulated Depreciation -Equipment ($7000)

(85,000-15,000)/10 = $7,000

Front 31

What is the calculation for straightline depreciation?

Back 31

Original Cost (commonly listed as "equipment," "building,") - Residual Value (usually given as $ amount or percentage) / number of years

Front 32

Journal Entry: A Note Payable of $186,000 is a 90-day note given to the bank on October 20 and bears interest of 10%

Back 32

Dr Interest Expense (3669);

Cr Interest Payable (3669)

($186,000 x 10% x 72/365 days)

Front 33

Record the journal entries for earned fees of $3,700 which were billed on account.

Back 33

Dr Accounts Receivable @ 3700; Cr Service Revenue @ 3700

Front 34

What are the assets of a Statement of Financial Position

Back 34

- Current Assets

- Long Term Investment

-Property/Plant/Equipment

-Intangible Assets

-Other Assets

Front 35

What is an example of an intangible asset?

Back 35

Software License

Front 36

What are the components of liabilities/equities on a statement of financial position?

Back 36

-Current Liabilities

-Long Term Liabilities

-Shareholders Equity

------capital shares

------contributed surplus

------retained earnings

------Accumulated OCI/other surplus

Front 37

What needs to be calculated net of tax for an SFP?

Back 37

Discontinued operations, OCI, and any adjustments on the Statement of Retained Earnings

Front 38

True or False: Depreciation expenses should be included on the Statement of Comprehensive Income

Back 38

FALSE: they will be noted on the Statement of Retained Earnings

Front 39

What is the calculation for working capital?

Back 39

Current Assets - Current Liabilities

Front 40

What is the current ratio?

Back 40

Current Assets/Current Liabilities

Front 41

In a Statement of Financial Position, inventory is recorded at the ____ of cost or Net Realizable Value (NRV).

Back 41

The lesser

Front 42

Another name for the Statement of Financial Position is

Back 42

Balance Sheet

Front 43

In a Statement of Changes in Equity, the beginning balance must be addressed two times, under two titles:

Back 43

Beginning Balance AS REPORTED; Beginning Balance AS ADJUSTED

Front 44

Unearned revenue on a Statement of Financial Position will be categorized as ____

Back 44

Current Liabilities, unless qualities for LT Liability are provided

Front 45

Provide examples of Nontrade receivables

Back 45

- advances to employees/officers

-Delayed payment terms from a purchaser

-Receivables from the government

-Dividends/interest receivable

-Amounts owing by insurance companies

Front 46

Examples of Operating Expense accounts on an Income Statement will include the following:

Back 46

Administrative expenses, selling expenses, depreciation expenses

Front 47

To calculate Net Sales for an Income Statement, deduct ____ from _____.

Back 47

Deduct Sales Discounts and Sales Returns and Allowances from Sales Revenue.

Front 48

To Calculate Earnings Per Share

Back 48

Net Income - Preferred Dividends // Weighted Average of Common Shares Outstanding

Front 49

The steps of preparing a Statement of Retained Earnings

Back 49

1. List Beginning Balance as REPORTED (Net Income from Previous Years -less- Previous Dividends Declared)

2. Add/Subtract adjustments (remember to list net of tax!)

3. 1-2 = Balance AS RESTATED

4. Add Net Income, net of tax (Income typically given, less tax rate)

5. Deduct dividends declared

6. 3+4-5 = Retained Earnings Balance

Front 50

Definition: Concessionary Terms

Back 50

Terms negotiated by a party that are more favourable than normal

Hint 50

Selling prices that are deeply discounted; The seller loosening its credit policies

Front 51

Clarify the differences between FOB Shipping and FOB Destination

Back 51

With FOB Shipping, title passes as soon as product is shipped; With FOB destination, title is only passed when it reaches its destination.

Front 52

Identify the journal entry/entries required for a product sale of $80,000, under 2/10 net 30 terms. (Provide responses for under/over 30 days)

Back 52

Under: Debit cash $78,400; debit sales discount $1,600; Credit Accounts Receivable 80,000

//

Over: Debit Cash 80,000; Credit Accounts Receivable 80,000

Front 53

What are the steps for the Revenue Recognition Process?

Back 53

Step 1: identify contract with customers;

Step 2: Identify the separate performance obligations in the contract

Step 3: Determine the transaction Price

Step 4: Allocate the transaction price to the separate performance obligations

Step 5: Recognize revenue when each performance oblig

Hint 53

Boeing example:

Step 1: Boeing signs a contract to deliver airplanes to WestJet;

Step 2: Boeing's obligation is to deliver airplanes to Westjet. If Boeing has also agreed to maintain the planes, this promise must also be recorded.

Step 3: The contract cost is $100 million dollars.

Step 4: In this case, Boeing has only one performance obligation: to deliver airplanes to WestJet

Step 5: Boeing recognizes revenue of $100 million for the sale to WestJet when it completes its obligation: the delivery of airplanes to WestJet.

Front 54

Steps for Percentage-of-Completion

Back 54

1. Costs incurred to date/most recent estimated total costs =percent complete

2. Percent Complete X Estimated total revenue = revenue to be recognized to date

3. Revenue/GP to be recognized to date LESS revenue/GP in prior periods = current period revenue

4. Current period revenue - current costs = Gross profit

Front 55

When performing bank reconciliations, the following will be added on the BANKING side:

Back 55

Deposits in transit, undeposited receipts, and bank erros

Front 56

When performing a bank reconciliation, the following will be deducted from the bank side:

Back 56

Outstanding cheques and bank errors

Front 57

When performing a bank reconciliation, the following will be added to the bank's side:

Back 57

Unrecorded bank credits and book errors

Hint 57

Very similar to depositor's answer

Front 58

When performing a bank reconciliation, the following will be deducted from the depositor's book side:

Back 58

Unrecorded bank charges and book errors

Hint 58

very similar to bank's answer

Front 59

Bank Reconciliation Items: Depositor's Impactors

Back 59

Deposits in Transit: deposits that have been recorded by the books, but not the account;

Outstanding Cheques: cheques that have been recorded in the books, but not the bank;

Depositor Errors: any unrecorded errors by the company

Hint 59

5 items

Front 60

Bank Reconciliation Items: Bank Impactors

Back 60

Bank Charges: Service, and other charges, made by the bank but not recorded in the books;

Bank Credits: Collections or deposits made by the bank, but not yet recorded in the books

Bank Errors: Any unrecorded errors by the bank

Front 61

What is the journal entry to acknowledge writing off bad debt?

Back 61

Dr AFDA, cr AR

Front 62

What is the journal entry to re-instate a written-off account?

Back 62

Dr AR, cr AFDA

Front 63

Features to include in Equipment

Back 63

-purchase price

-freight/handling charges

-insurance while in transit

-cost of trial runs

-storage while in transit