Cash Flows
Which of the following is a financing activity?
A) Lending money
B) Depreciation Expense
C) Issuing debt
D) Selling Land
Issuing debt
Patagonia sells $500,000 worth of merchandise on terms of 2/10 n/30 on January 1st.
The buyer pays Patagonia on January 4th.
Provide Patagonia's journal entry on January 1st, and 4th
AR. $500,000
Sales Revenue. $500,000
Cash $490,000
Sales Discount $10,000
AR $500,000
Write out the accounting equation in its most expanded form. Show where the accounts stem from.
Assets = Liabilities + Stockholders Equity
Assets = Liabilities + CS + RE
Assets = Liabilities + CS + Rev - Exp - Dividends
A company buys items at FOB Shipping Point, at what time do the buyers claim ownership of the items?
As soon as it is shipped
If always thought in the POV of the buyer than ownership claimed at Shipping Point/Destination.
Using the indirect method depreciation is...
A) Subtracted from the operations section
B) Added to the operations section
C) Subtracted from the investing section
D) Added to the investing section
B) Added back to the operations section
Because depreciation is a non cash expense that has already been taken out of NI, so on the statement of cash flows it must be added back.
Scooby Do collects $800,000 in revenue. COGS was $320,000, taxes cost $10,000 and Scooby paid himself $120,000.
What is Scooby's gross profit?
$480,000 = (800 - 320)
Which account is not a contra account?
1) Allowance for Doubtful Accounts
2) Sales Discounts
3) Accumulated Depreciation
4) Sales Revenue
Sales Revenue
In a period of FALLING prices, which inventory costing method gives you the highest ending inventory?
LIFO
During 2014 Vans had $131,000 in cash sales and $970,000 in credit sales. The A/R balances were $180,000 and $212,000 at December 31, 2013 and 2014 respectively.
What was the total cash collection from customers during 2014?
$1,069,000
A limo is bought for $65,000 with an estimated salvage value of $5,000. The straight line annual depreciation is $5,000. The accumulated depreciation account is at $25,000. What is the remaining useful life?
7 Years
(65,000 - 5,000) / x = 5,000
x = 12 years estimated useful life
25,000 / 5,000 = 5 years already used
12 - 5 = 7 years left
Which financial statements accounts are zeroed out at the end of a period? Where are these accounts zeroed out to?
Income Statement
Retained Earnings on the Balance Sheet
A snowboard repair shop receives a broken snowboard on December 1st. The shop buys parts for the board on December 3rd. They bill the customer on Dec 5th. Fix the board on the 7th. Then collect the money and give the board to the customer on the 10th.
When will the shop record Sale Revenue?
The 7th
Obligation is completed.
Create the operating section of a cash flow statement using the indirect method. Go to excel
Answer on Excel
Socks R Us 5% of their accounts recievable will be uncollectable. The A/R balance is $400,000. Sock's R US' allowance for doubtful accounts currently has a debit balance of $3,000. Provide the adjusting entry to account for this.
Bad Debt Expense. $23,000
AFDA. $23,000
How would you record the journal entry for a company declaring $20,000 worth of dividends?
Retained Earnings. 20,000
Dividends Payable. 20,000
Net Income Results from...
A) Div > RE
B) Expenses < Assets
C) Expenses < Revenues
D) Revenues > Taxes
C) When Revenues are greater than expenses a net profit results, otherwise known as net income.
What is the equation for RE?
RE = Beginning RE + Net Income - Dividends
Which account will have a zero balance after closing entries have been journalized and
posted?
A) Service revenue.
B) Supplies.
C) Prepaid Insurance.
D) Accumulated Depreciation.
A) Service Revenue
Any income statement accounts are always closed out at the end of the year (think expenses, revenues, NI)
Assets and Liabilities are always permanent.
There are some equity accounts that are closed out like, dividends.