Act210 Exam Four

Front 1

Define Revenue Expenditures

Back 1

Revenues that are expensed immediately

Front 2

Define Capital Expenditures

Back 2

Costs that are not expensed immediately but are included in the PPE asset account

Front 3

Define Cash Equivalent Price

Back 3

The fair market value of an asset received. It is not used to increase the recorded cost after acquisition

Front 4

Define Depreciation

Back 4

Allocating the cost of an PPE asset over its useful life in a systematic way

Front 5

Define Straight Line Depreciation

Back 5

Equal amount of depreciation each year of the assets useful life

Front 6

Formula for Depreciable Cost

Back 6

(Cost-Salvage Value)/Years= depreciation expense

Front 7

Define Declining Balance Depreciation

Back 7

More depreciation in early years

Front 8

Define Units of Activity Depreciation

Back 8

Useful life is expressed in units of production

Front 9

Formula Return on Assets Ratio

Back 9

Net Income/Average Total Assets

Front 10

Formula Asset Turnover Ratio

Back 10

Net Sales/ Average Total Assets

Front 11

Define Accounts Receivable

Back 11

Amounts customers owe on account

Front 12

Define Notes Receivable and advantages

Back 12

Claims for which formal instruments of credit are issued. Advantages- stronger legal claim and can be sold

Front 13

Define Other Receivables

Back 13

Interest Receivable

Front 14

Define Bad Debts Expense

Back 14

Uncollectible debts expense

Front 15

Define promissory note

Back 15

A written promise to pay a specified amount of money at a specific time

Front 16

Formula for Interest

Back 16

Interest= Face Value* Annual Rate* Number of Years

Front 17

Receivable Turnover Ratio

Back 17

Net Credit Sales/ Average Net Receivables

Front 18

Direct Write Off Entry

Back 18

Debit Bad Debts Expense
Credit Accounts Receivable

Front 19

Estimated Uncollectible Entry

Back 19

Debit Bad Debts Expense
Credit Allowance for doubtful accounts

Front 20

Recording an uncollectible account entry

Back 20

Debit Allowance for doubtful accounts
Credit Accounts Receivable

Front 21

Recovery of an Uncollectible Account Entry

Back 21

Debit Cash
Credit Accounts Receivable

Front 22

Recording a Note Receivable Entry

Back 22

Debit Notes Receivable
Credit Accounts Receivable

Front 23

Maturity of a Note Receivable Entry

Back 23

Debit Cash
Credit Notes Receivable
Credit Interest Revenue (Face*Rate*6/12)

Front 24

Accrual of Interest Before Maturity Entry

Back 24

Debit Interest Receivable
Credit Interest Revenue (Face*Rate*5/12)

Front 25

Accrued Interest at Maturity Entry

Back 25

Debit Cash
Credit Notes Receivable
Credit Interest Receivable(accrued)
Credit Interest Revenue (Face*Rate*1/12)

Front 26

Credit Card Sale Entry

Back 26

Debit Cash
Debit Sales Service Charge
Credit Sales (full)

Front 27

Depreciation Entry

Back 27

Debit Depreciation Expense
Credit Accumulated Depreciation

Front 28

Gain on Sale of Equipment Entry

Back 28

Debit Cash
Debit Accumulated Depreciation
Credit Office Furniture
Credit Gain on Sale of Equipment

Front 29

Loss on Sale of Equipment Entry

Back 29

Debit Cash
Debit Accumulated Depreciation
Debit Loss on Disposal
Credit Office Furniture

Front 30

Intangible Asset Entry

Back 30

Debit Amortization Expense
Credit Asset (Ex Patent)