2.A,B,C,D Select Financial Statements Accounts. Cash. Inventory. PPE

Double-declining balance =

(2 / estimated useful life in years) * (historical cost - accumulated depreciation)

If the customer did not take advantage of the sales discount under the net method (where you record the discount inside the sales), what accounts do you credit when cash is received?

Accounts receivable and Sales discounts forfeited

Straight line method =

Acquisition cost / number of years. Acquisition cost is price minus salvage value

How is double-declining balance method recorded?

As a rate of depreciation twice the straight-line rate applied to the book value of the asset. Depreciation = (Historical Cost - Accumulated Depreciation) / Life x 2

A lending agreement where the borrower assigns AR to the lending institution in exchange for a loan, where AR serves as a collateral is called...

Assigning

How are inventory accounted for using LIFO or the Retail Inventory Method valued?

At the lower of cost or market value

When recording discounts under the gross method, what accounts do you debit when when cash is received?

Cash and Sales discount (contra-sales account). (and credit Accounts receivable)

Market price should be the middle of which three numbers?

Ceiling, Floor and Replacement cost

What kind of depreciation method refers to the depreciation of a collection of assets that are dissimilar?

Composite depreciation

LIFO approximates most closely to COGS or Ending Inventory?

Cost of goods sold

On a sales allowance, at the end of the year we first record all the returns that were made (debit sales, credit cash), debit inventory and credit cost of goods sold, and two other entries of...

Debit Sales returns, credit refund liability for the extra that was not returned, and another entry of debit Inventory Estimated return, with credit to cost of goods sold. And finally, when they return the extra estimated, debit refund liability, credit cash, and debit inventory and credit Inventory Estimated return

Using allowance method to recognize uncollectible accounts, we should...

Decrease both accounts receivable (credit) and the allowance for uncollectible accounts (debit). ADA is a contra-asset account

The sale of a note to a third party, usually a bank or other financial institution at a value less than the face value is called...

Discounting

When are interest costs for self-construction capitalized?

During the construction period. Once construction is completed and asset placed into service, it is expensed

FIFO approximates most closely to COGS or Ending Inventory?

Ending inventory

The sale of AR for a fee is called...

Factoring

Profit Margin =

Gross Profit / Total Net Sales

What kind of depreciation method refers to the depreciation of a collection of assets that are similar in nature?

Group depreciation

Periodic inventory system's disadvantage is that...

It includes the cost of inventory sold and inventory shortages

Is freight out included in Cost of Sales?

No

Is the buyer charged for F.O.B. destination? (Free on board)

No

Periodic inventory system provides...

Only a period-end record of the inventory balance

What is the type of inventory system used for interim reporting purposes that are actual amounts?

Perpetual inventory system

The retail inventory method includes _______________ in the calculation of both cost and retail amounts of goods available for sale

Purchase returns

According to the lower of cost of market value, how is market defined as?

Replacement cost

Asset Turnover Ratio =

Sales / Average total assets

Net Profit =

Sales x profit margin

Net Realizable Value (NRV)...

Selling price minus costs to complete/sell

Valuation of inventory items is required at...

The lower of cost or replacement cost (market cost)

In all cases where FIFO is used, the inventory and cost of goods sold would be ______________ at the end of a period whether a perpetual or a periodic system is used (higher, lower or the same)

The same

When there is a debit on the Allowance for Doubtful Accounts at the end of the year, the company... (under or overestimated)

Underestimated the allowance, which will be made up in the next year

What is LIFO liquidation?

When inventory costing method liquidates its older LIFO inventory. It happens when current sales exceed purchases, resulting in the liquidation of any inventory not sold in a previous period