Acct - Accounting Principles Overview

Front 1

Formula for deriving assets?

Back 1

ASSETS = LIABILITIES + OWNERS EQUITY

Front 2

Components of Assets?

Back 2

Cash, Accounts Receivable, Supplies, Equipment

Front 3

Components of Liabilities?

Back 3

Notes Payable, Accounts Payable, (Pretty much anything Payable)

Front 4

Formula for calculating Owners Equity?

Back 4

Capital - Drawings + Revenue

Front 5

Components of an Income Statement?

Back 5

Date (Month End - Month Year)
Revenues
Expenses
Net Income

Front 6

Journalize the following transaction:

Paid salaries $3,500

Back 6

Salaries Expense D-$3,500
Cash C-$3,500

Front 7

Components of a Balance Sheet?

Back 7

Date (Month Year)
Assets
Liabilities and Owner's Equity

Front 8

How do you record an entry that does not require one?

Back 8

No Entry 0
No Entry 0

Front 9

Journalize the following transaction:

Received statement from R.Wynns showing gross concession receipts of $1,000 and the balance due to The Lake Theater of $170 ($1,000 × 17%) for April. Wynns paid one-half of the balance due and will remit the remainder on May 5.

Back 9

Accts Receivable = D-85
Cash = D-85
Revenue C=170

Front 10

What happens with a Debit within a ledger when dealing with Payables?

Example: Current balance for account payables is $2000

You debit $1000 to account payables

Back 10

Your Accounts payable balance would become $1000

This is unique because you are dealing with a negative account so when you add to the negative account you are subtracting.

Front 11

Journalize the following transaction:

Paid $1,800 for salaries due employees, of which $1000 is for September.

Back 11

Salaries Expense D=1000
Salaries Payable D=800
Cash C=1800

Front 12

What are the negative accounts?

Back 12

XXX Payable
Unearned Revenue

Front 13

Describe a Owner's Equity Statement

Back 13

Owner’s Equity Statement

For the Month Ended September 30, 2010

J.Rand, Capital, September 1
Add: Net income
J.Rand, Capital, September 30

Front 14

What Accounts are debited in a trail balance?

Back 14

Cash
Acct Receivable
Supplies
Prepaid Insurance
Equipment
All Expenses
Drawings

Front 15

What does a Financial Statement look like?

Back 15

Service Revenue
Income Summary

Income Summary
All Expenses

Income Summary
Capital

Capital
Drawing

Front 16

What transactions take place when a distributor sells inventory?

Back 16

Two entries need to be made

Accounts Receivable
Sales

Cost of Goods Sold
Merchandise Inventory

Front 17

F.O.B. Destination?

Back 17

Seller pays freight charges

Front 18

F.O.B. Origin

Back 18

Buyer pays freight charges

Front 19

What does the terms 1/10, n/30 imply?

Back 19

The buyer gets 1% off within 10 days, and gets nothing if after but before 30 days.

Front 20

What accounts are affected when and account is credited when merchandise is returned?

Back 20

Accounts Payable is debited

Merchandise Inventory is credited

Front 21

How does a supplier record a purchase using FOB shipping point?

Back 21

Merchandise Inventory is debited
Cash is credited

Front 22

What accounts are affected if you purchase on account with 1/10, n/30 terms?

Back 22

Merchandise is debited
Accounts Payable is credited

The discount does not take place till you actually pay it off.

Front 23

What accounts are affected if your company receives a payment under the terms 1/10, n/30 within the ten days?

Back 23

Cash is debited
Sales Discounts is credited
Accounts Receivable is credited

Front 24

How does a supplier record a purchase using FOB destination?

Back 24

Freight-out is debited
Cash is credited

Front 25

How does a supplier record a refund given to a customer for defective equipment?

Back 25

Sales Returns and Allowances are debited
Cash is credited

Front 26

What is LIFO?

Back 26

Inventory System that states the newest (last in) will be the first sold (first out).

This has a tax deferred benefit,

Front 27

What is FIFO?

Back 27

Inventory System that uses first in first out to sell products.

Front 28

Concerning petty cash, what is cash over and short?

Back 28

When the amount in petty cash is different than what the receipts state.

IE.. Receipts state there should be $10 left but there is only $7

You would need to debit over and short to $3.

If you ended up with $13 and the receipts say there should be $10 you would credit cash over and short.

Front 29

When a partner brings in Account receivables what other account needs to be adjusted?

Back 29

Allowance for Doubtful accounts

If a partner is bringing in money from his account receivables, then you need to adjust for those who may not pay.

Front 30

What accounts are recorded when a note is issued?

Back 30

Accounts Payable is debited
Notes Payable is credited`

Front 31

What accounts are affected when a note with interest is paid?

Back 31

Notes Payable is debited
Interest Expense is debited
Cash is credited

Front 32

What accounts are affected when interest is accrued?

Back 32

Interest Exp is debited
Interest Payable is credited

Front 33

Formula for working capital?

Back 33

Assets - Liabilities = working capital

Front 34

Working Capital Ratio formula?

Back 34

Assets / Liabilities = ratio

Front 35

How do you calculate straight-line depreciation method?

Back 35

Cost of equipment - Salvage Value / useful life = yearly depreciation value

Front 36

How do you calculate units of activity depreciation method?

Back 36

Cost - salvage / Units used for entire life = Unit Usage Percentage

Units used this year * Unit Usage Percentage = depreciation value

Front 37

How do you calculate units of activity depreciation method?

Back 37

annual depreciation = depreciation rate * book value at beginning of year

(100% / Expected life) = depreciation rate

This may be doubled if using double declining method

Front 38

When determining cost of land, what items should not be used in the calculation?

Back 38

Salvaged materials
architects fee
drive-ways and parking lots