Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
38 Cards in this Set
- Front
- Back
What is the difference between FOB shipping point and FOB destination? |
1. FOB shipping point: Purchaser pays and down goods in transit 2. FOB destination: Seller pays and owns goods in transit |
|
What are consigned goods? |
Placing goods somewhere for other companies to sell, owner counts in their inventory |
|
What is the Specific Identification Cost? |
Unique inventory items for items of different characteristics |
|
How do you calculate average cost per unit, COGS and ending inventory? |
1. Average cost per unit: Cost of goods available/ number of units available 2. Cost of goods sold: Number of units sold * average cost per unit 3. Ending inventory: Number of units on hand * average cost per unit |
|
Which inventory method is highest and which is lowest? |
Highest: Weighted average Lowest: FIFO |
|
What are the two principles related to inventory? |
1. Comparability: Consistent period to period 2. Disclosure: Relevant and faithful |
|
What is lower of cost and net realizable value rule? |
Inventory is reported at the lower of cost or net realizable value |
|
How do you determine ending inventory using the gross profit method? (6) |
Beginning inventory Add: Purchases Goods available for sale =Estimated COGS Less: Net sales revenue Less: Estimated gross profit Estimated cost of ending inventory lost |
|
What are the costs of land? |
Purchase price Commissions Survey and legal fees Back property taxes paid Grading and removing unwanted buildings |
|
What are the costs of building? |
Construction: Architectural fees, building permits and contractors charges, materials, labor and overhead and interest on funds borrowed Purchased: Purchase price, brokers commission, taxes paid and costs to repair and renovate |
|
What are the costs of equipment? |
Purchase price ( after discounts) Transportation Insurance in transit Sales and other taxes Purchase commission Installation and testing |
|
What are the costs of land improvements? |
Parking lots Driveways Savings Fences Sprinkler systems |
|
How do you calculate basket purchases? |
(Market value/Total market cost)*total cost of assets |
|
What is capital expenditures? |
Increase capacity or extend useful life, by buying overhaul |
|
How do you calculate the straight line method? |
(cost-residual value)/ useful life in years
|
|
How do you calculate the straight line rate? |
1/useful life in years |
|
How do you calculate units or production? |
(cost-residual value)/useful life in units |
|
How do you calculate the double dimishing balance? |
DDB rate*carrying amount |
|
How do you calculate the DDB rate? |
Straight line rate *2 or 2/life in years |
|
How do you calculate DDB final year depreciation? |
Carrying amount at the beginning final year-residual value |
|
What is impairment? |
Obsolescence, physical damage and loss in market value |
|
What are intangible assets depreciated at? |
Straight line and recorded as amortization |
|
What are intangible assets? |
Patents, copyrights, trademarks, franchises and licenses and goodwill |
|
How is goodwill recorded? |
Assets are market value Less: Liabilities =Market value of net assets Purchase price paid Goodwill ( market value-purchase price paid) |
|
What is a non strategic/passive/available for sale investment? |
Investors holds less than 20% |
|
How to adjust non strategic investments? |
Net income approach: long term investment and unrealized gain Other comprehensive income approach: Long term investment and other comprehensive income |
|
What is an equity method investment? |
Investors holds 20-50% and has a role in the investors decisions |
|
For equity method investment how is the t-account recorded? |
Left: Purchase and net income Right: Dividends |
|
For equity method investment what revenue is recorded on the income statement? |
Revenue from net income |
|
What is a consolidated subsidiaries? |
Investor owns 50% or more of investees stock and can elect majority of board members -Investor is parent company -Combine financial statements |
|
For foreign currency translation what does each balance sheet use for their translation? |
Assets and liabilities: Current exchange rate Retained earnings: When company was bought Common shares: Average exchange rate |
|
How do you account for sales tax payable? |
Cash GST/PST/HST Payable Sales |
|
How do you do the journal entry for warranty expense? |
Warranty expense Warranty payable Warranty payable Inventory |
|
What does the leverage ratio measure? |
The debt for financing assets |
|
What does times interest earned measure? |
Low rate: Difficulty in paying interest and high ratio |
|
What is the difference between operating and financing leases? |
Operating: Lessor retains risk and rewards of owing and records rent expense Financing: Lessee assumes risk and rewards of ownership, lessee capitalizes the leased asset and records a long term liability |
|
What is a provision? |
Contingent liability |
|
What is an underwriter? |
Organization that purchases the bonds from an issuing company and resells them to its clients or sells them for a commission |