MGT103
This is the Accounting Equation.
What is Assets = Liabilities + Stockholders’ Equity
Company A purchased equipment for an all-in cost of $60,000 on January 1, 2026. The estimated useful life is 5 years with no salvage value. What depreciation expense should Company A record if they used the straight line method?
$12,000
$60,000/5
= $12,000
On December 6, 2028, Amazon receives a cash dividend of $5,200 on its investment in the common stock of Chevron. What journal entry should Amazon make to record this event?
Cash $5,200
Dividend Revenue $5,200
Following the 1929 financial crash, this agency was founded to oversee corporate financial reporting. It is still fulfilling this duty today.
What is the SEC?
How does Santa's accountant value his sleigh?
The Net Present Value
This financial statement contains revenues and expenses.
What is the Income Statement?
Company B is issuing a bond for $500,000.The Present Value of the bond is $470,000. Is Company B’s bond being issued at a discount or premium?
Discount
James Company has issued a convertible bond on January 1, 2026 with a conversion rate of 10 common shares for each bond starting January 1, 2028. Beginning January 1, 2031, the conversion rate is 12 common shares for each bond. Beginning January 1, 2035 it is 15 common shares for each bond. What conversion rate should James use to calculate diluted EPS?
15 shares to one bond
Reason: it is the most dilutive conversion rate
In 2001, this major energy company filed for bankruptcy after being exposed for hiding billions in debt in off-the-book entities.
What is Enron?
Who stars in the action movie The Accountant?
Ben Affleck
A $100,000 note was issued on September 1, 2026. The note is due along with 6% interest on April 1, 2027. What is the interest expense at the year ended December 31, 2026?
$1,400
$100,000 x 0.06 x 4/12
= $2,000
Company C constructs a research and development building with a useful life of 10 years for $2,000,000. The building has a salvage value of $200,000. How much research and development expense should Company C record in relation to the building?
$180,000
($2,000,000-$200,000)/10
= $180,000
Manchester Inc. is charged a 20% income tax in 2026. A temporary difference exists at year-end because Manchester reports the revenue and related accounts receivable differently for book and tax purposes. The book basis of accounts receivable is $30,000, and the tax basis is zero. What is Manchester’s deferred tax liability at the end of 2026?
$6,000
($30,000-0) x 20%
= $6,000
Congress passed this Act in 2002 to improve corporate responsibility, financial disclosures, and combat fraud.
What is the Sarbanes-Oxley Act?
This Academy Award show has kept accountants busy for up to 1700 hours, hand-counting the ballots.
What is the Oscars.
This section of the classified balance sheet is home to trading investments and marketable securities.
What are Current Assets?
Company E borrows $500,000 on October 1, 2026 by signing a 535,000, 4-month, zero-interest bearing note payable. What is the entry to record the issuance of the note?
Cash $500,000
Discount on Notes Payable $35,000
Notes Payable $535,000
Sequoia Inc. sold for $34,000 equipment that cost $41,000 and had a book value of $36,000. As a result, the company reported a loss of $2,000 ($34,000 cash − $36,000 book value) on its sale. What is the net cash flow Sequoia will report on this operating activity?
+ $2,000
Reason: Evergreen must add back to net income the loss on the sale of the equipment. The reason is that the loss is a noncash charge to the income statement, but still reduces net income.
This Amendment, ratified in 1913, allowed for federal income tax, creating massive demand for professional accountants.
What is the 16th Amendment?
This musician studied accounting at the London School of Economics before abandoning his studies to focus on his career with the Rolling Stones.
Who is Mick Jagger?
Cycle inc. purchased inventory for $10,000, 2/10, net 30. What would they recognize as the value of their new inventory at the date of purchase if they used the net method?
$9,800
$10,000 x 2% =$200
$10,000 - $200 =$9,800
Company D sold gift cards for $2,000 in 2026. They estimate that 20% of the gift cards will not be redeemed. During the period, gift cards valued at $800 were redeemed. What is the total amount of revenue Company D will recognize with regard to the gift cards in 2026?
$1,000
$800 redeemed/ $1,600 total expected redemptions = 50%
20% x $2,000 unearned GC revenue = $400
50% x $400 = $200 breakage revenue
$800 redeemed = $800 GC revenue
$800 + $200 =$1,000 total revenue recognized
Volt offers customers a $2 discount on the purchase of a large cup of coffee when they buy a bag of its premium Motor Moka beans (which normally sell for $12) at the same time. A large cup of coffee normally retails for $3. Justin decides this offer is too good to pass up and buys a bag of Motor Moka beans for $12 and a large cup of coffee for $1. How much revenue should Volt recognize on the sale of these two purchases?
$10.40 for the beans and $2.60 for the large coffee
$12 + $3 =$15.00 no discount total
$12/$15 =0.8 x $13 deal total = $10.40 coffee bean revenue
$3/$15 =0.2 x $13 = $2.60 coffee revenue
This merchant was dubbed the "Father of Modern Accounting" after publishing the first written work detailing double-entry bookkeeping system in Venice in 1494.
Who is Luca Pacioli
This Nike co-founder is a CPA who actually created Nike as a part of one of his MBA courses.
Who is Phil Knight?