Adjustments
What type of of adjustments are needed if cash is received first and the service is preformed later? What if the service is preformed first?
Deferral.
Accrual.
How is a petty cash fund established?
Debit to petty cash and a credit to cash.
What are the two inventory systems?
Periodic and perpetual
What does COGS stand for? What type of account is it?
Cost of Goods Sold
Expense
How are sales terms presented?
percent discount/days to retain the discount, n/total days to pay
Depreciation for the year totaled $25,000. Record the journal entry.
Depreciation expense 25,000
Accumulated depreciation 25,000
What internal control is shown while conducting a bank reconciliation?
Independently Verify
Which inventory system can accurately calculate shrinkage?
Perpetual
The petty cash fund has a balance of $500 and the company raised the fund to $750. Record the journal entry.
Petty cash 250
Cash 250
Salaries and utilities in February were $10,000 and $3,000 respectively, these will be paid for in March.
Salaries and wages expense 10,000
Utilities expense 3,000
Salaries and wages payable 10,000
Utilities payable 3,000
Daily Double
What types of accounts are always used in adjustments? Which account is never used?
A revenue or expense and an asset or liability.
Never cash.
Which side of the bank reconciliation are journal entries required for?
The book side
What is the formula to calculate COGS?
COGS = Beg. Inventory + Purchases - Ending Inventory
Why are closing entries done, what is their affect on the financial statements?
To transfer temporary accounts into permanent ones. Income Statement accounts are put into Retained Earnings.
What are the 5 types of internal controls?
Segregate duties
Establish responsibilities
Restrict access
Document procedures
Independently Verify
Complete 2 journal entries.
1/1. Paid upfront for a year's worth of rent totaling $60,000.
2/28. Record the use of rent previously paid for on 1/1.
Prepaid Rent 60,000
Cash 60,000
Rent Expense 10,000
Prepaid Rent 10,000
When the petty cash fund is replenished, what accounts are affected, which account is never affected?
Accounts that represent petty cash transactions and cash. Never petty cash.
Sold 100 units of inventory for $3,000 on account. Inventory that was sold cost $20 each. Record both journal entries required under the perpetual system.
Accounts Receivable 3000
Sales Revenue 3000
COGS 2000
Inventory 2000
If a bank reconciliation is not completed, which balance sheet account is misrepresented(there can be more than one)?
Cash(AR or AP)
Supplies had a beginning balance of $1,500. Debits for the period were: 3,000, 5,000, and 2,500. After counting the supplies on hand there was only $2,000, record the journal entry.
Supplies expense 10,000
Supplies 10,000
Using the partial trail balance, complete a closing entry.
Sales Revenue 45,000
Salaries and Wages Expense 20,000
Utilities Expense 5,000
Depreciation Expense 12,500
Sales Revenue 45,000
Salaries and Wages Expense 20,000
Utilities Expense 5,000
Depreciation Expense 12,500
Retained Earnings 7,500
Briefly explain the bank reconciliation process.
1. Compare beginning balances.
2. Add values to both sides as needed(EFTs, deposits in transit, errors, etc.)
3. Subtract values from both sides as needed(Outstanding checks, NSF, errors, etc.)
4. Compare ending balances(Should be the same).
Daily Double
If the beginning balance of inventory was $4,500, purchases for the month totaled $20,000, sales were $45,000, and ending inventory was counted to be $5,000. Record the entry for the periodic method.
COGS 19,500
Inventory 500
Purchases 20,000
Using a partial trial balance, create a multi-step Income Statement.
Sales Revenue 100,000
COGS 55,000
SGA Expenses 15,000
Other Expenses 10,000
Income Tax Expense 5,000
Interest Expense 2,500
Income Statement
Company X
For the period ended 12/31
Net Revenue 100,000
COGS 55,000
Gross Profit 45,000
SGA Expense 15,000
Operating Income 30,000
Other Expenses 10,000
Income before Interest and Taxes 20,000
Interest Expense 2,000
Income before Taxes 18,000
Income Tax Expense 5,000
Net Profit 13,000
How many siblings do I have?
2(1 older brother, 1 younger brother)