ACC 102 - EXAM 2 Study Set

Purchases Formula?

(Ending inventory - Beginning inventory) + COGS

On a Accrual adjustment with a expense account, what do you Cebit (Cr)?

Credit (Accrued Expense)

On a Accrual adjustment with a expense account, what do you Debit (Dr)?

Debit Expense (Like Utilities Expense)

What can interest earned be recorded as on the Balance sheet and Income statement?

Interest receivable (Asset) = Balance Sheet Interest revenue = Income statement

Sales Returns and Allowances is what type of Account?

It is a CONTRA-Sales Account

Gross Profit Formula?

Net Sales - COGS

When you close out accounts, what happen to temporary accounts?

They zero out

When you see Invoice you think what?

Think! Accrual Adjustment

On a deferral adjustment with a prepaid asset, what do you Credit (Cr)?

You Credit an Asset account (Cash, Prepaid expense)

On a deferral adjustment with a deferred revenue, what do you Credit (Cr)?

You Credit an Revenue account

On a Accrual adjustment with a revenue account, what do you Debit (Dr)?

You Debit an Asset ( A Receivable account)

On a deferral adjustment with a deferred revenue, what do you Debit (Dr)?

You Debit an Deferred Revenue account

On a deferral adjustment with a prepaid asset, what do you Debit (Dr)?

You Debit an Expense Account

Contra Accounts for Sales Revenue?

1. Sales Return & Allowances 2. Sales Discount Both bring Sales Revenue Down

What is Deferred Revenue classified as on the Balance Sheet?

A Liability Why?? (Good and Service have not been delivered or provided yet, means economic burden in the future to the business)

What is an Accrued Expense account?

A Liability (Inside the balance sheet)

Gift cards are classified as what?

A deferred revenue *A liability*

Are financial statements are involved in adjusting journal entries?

Always involved 1 Balance Sheet and 1 Income Statement

On a Balance Sheet, what is a pre-paid expense classified as?

An Asset (Brings economic benefit in the future)

When you sell Inventory, what does it become in the Income Statement?

An Expense If not sold, will remain an Asset in Balance Sheet

On a Accrual adjustment with a revenue account, what do you Credit (Cr)?

An Revenue account

Accumulated Depreciation appears in what?

Appears in the Balance Sheet

Any cost you incurred to get that ASSET, like shipping or transportation is recorded as what?

As part of the ASSET

How to Calculate COGAS?

BI + P

COGAS (cost of goods available for sale) Formula ?

BI + Purchases

EI Formula?

COGAS - COGS Under Perpetual method COGS

COGS (Cost of Goods Sold) Formula

COGAS - EI Under Periodic method EI Is known factor

BI + P - E = ???

COGS

What are the type of Credits you can credit for returns?

Cash Account Receivable (If Customer Paid on Account) Deferred Revenue **Gift Cards / Store Credit

In Accrual Adjustments, Cash came when?

Cash came After (Accrual)

In Deferral Adjustments, Cash came when?

Cash came First (Pre-Payments)

What type of account is accumulated depreciation?

Contra Asset Account ( Balance Sheet) Designed to Contra (Reduced the asset it is attached to)

What do Gross Profit % tells us about the company?

Determine whether company is earning enough to cover its operating expenses Analyze changes in the company over time Compare it to another company Higher the better

What else makes Retained earning go down, besides Net Loss?

Dividends

BI + P - COGS = ???

EI

When a deferral adjustment is made to an asset account, that asset becomes a(n)

Expense

Merchandiser's Inventory

Merchandiser's total cost of acquiring the goods that it has NOT SOLD YET

What makes retained earnings go up? Increase?

Net Income

What makes retained earnings go down? Decrease?

Net Loss

Since Sales Revenue has a normal credit balance, what is the normal balance of Sales Discount?

Normal Debit Balance

Since Sales Revenue has a normal credit balance, what is the normal balance of Sales Return & Allowance?

Normal Debit Balance

Which Inventory system ONLY updates ending inventory at the end of year?

Periodic Inventory System

Which Inventory system will always give you an updated balance sheet?

Perpetual Inventory System

Net Method?

Record the sales at "Discounted" price ASSUME they take the discount

Gross Method?

Record the sales at (Gross) full value

When a deferral adjustment is made to an liability account, that liability becomes a(n)

Revenue

What is an Accrued Revenue?

Revenues earned (Did the service), but didn't receive cash

Gross Profit Formula

Sales Revenue - COGS

Net Sales Formula?

Sales Revenue - Sales Discount - Sales Return & Allowances

What is an Amortization?

Similar to Depreciation, concept applies to using up long-term assets that lack physical substance. - LIMITED Period of USEFULNESS

What is Shrinkage?

The cost of inventory lost to theft, fraud, and error.

FOB (Freight on Board) shipping point means?

Title passes at the Seller's place of business

FOB (Freight on Board) destination means?

Title passes at the buyers place of business

What is the purpose of a post-closing trial balance?

To close out, revenues and expenses -- ZERO-- out account

When are adjusting entries typically prepared?

Typically at END of the Accounting Period

When do Merchandisers record revenue?

When they fulfill their performance obligations by transferring control of goods to a customer, either for cash or on credit