Note Payable
Classified Balance Sheet
SOCF
AR, IA, JE
T- Accounts, Trial Balance
100
What is the formula for calculating interest expense?
Principal x Rate x Time
P x R x T
100
What are current assets and in what order are they listed?
assets that are expected to be converted to cash or used within one year.
List in order of liquidity
100
What is the first step in the operating activities section using the indirect method?
Start with net income
100
What is the formula of AR?
Ending Balance = BB + Sales on account - Cash collected from customers
100
What is the order of accounts in trial balance?
A. Assets
B. Liabilities
C. Equity
D. Revenue
E. Expense
200
Interest payable is shown as a
liability
200
What are current liabilities?
liabilities that are due within one year.
200
A company had a loss on the sale of equipment. What is the proper treatment of this loss in the operating section under the indirect method?
Add it back to net income
200
What is the normal balance?
the side on which it increases
200
This side of a T-account is always on the left.
debit
300
What is the formula for calculating Cash paid at maturity?
Principal + total interest expense
300
What is P P & E? What falls into it?
Property, Plants, and Equipment
Long term assets
300
How would an increase in inventory shown in the operating section in the SOFC?
increase in inventory = deduction in the operating section
300
Journal Entry:
Owed sum of salaries expenses to employees for work done during December, Year 1, that will be paid during January, Year 2.
debit: salaries expense
credit: salaries payable
300
T-accounts are commonly used in this accounting step
posting process
400
What is the formula for Debt Ratio? What is better higher or lower?
Total Liabilities / Total Assets
Lower is better
400
What is the formula of the current ratio?
Current Assets / Current Liabilities
Higher is better = ability to pay bills that are coming due
400
Which of the following is a non-cash charge that must be added back to net income under the indirect method?
Loss on sale of investment
Interest expense
Depreciation expense
Depreciation expense
400
Journal Entry:
Collected cash in advance for services to be provided over the next year
debit cash
credit unearned revenue
500
What is the Retained Earning Formula?
retained earnings = beginning retained earnings + net income profit - dividend
500
What is one distinguishing characteristic of MOST long term assets? What is the exception?
If it depreciates over time.
Land is the exception
500
Is a decrease in accounts payable added or deducted in the SOCF?
deducted
500
What are the four rules talked about in class regarding journal entries?
1. expenses are always debt
2. revenue are always debit
3. CS - credit
4. dividends - debit