Interest is associated with what?

Notes receivable and notes payable

Aging for the allowance: The aging method usually refers to the technique used for determining
the credit balance needed in the account Allowance for Doubtful (or Uncollectible) Accounts. This
Allowance account is a contra asset account connected with Accounts Receivable. Usually when a
credit adjustment is entered into the Allowance account, a corresponding debit amount is entered
into Bad Debts Expense (or Uncollectible Accounts Expense)

Percentage of receivable of allowance: Example: The company estimates bad debt

based on the percentage of receivables method. The balance in Accounts
Receivable on December 31, 2013 was $530,000. The company estimates that 6%
of receivables are uncollectible. Allowance for Doubtful Accounts has a credit
balance of $17,000. Record the adjusting journal entry necessary to record bad
debt.
As in all journal entries, the first step is to figure out which accounts will be used.
Because this is just another version of an allowance method, the accounts are Bad Debt
Expense and Allowance for Doubtful Accounts.
On to the calculation, since the company uses the percentage of receivables we will
take 6% of the $530,000 balance.
$530,000 x 6% = $31,800
Now to consider what this amount is. We used Accounts Receivable in the calculation,
which means that the answer would appear on the same statement as Accounts
Receivable. Therefore, we have to consider which of our accounts would appear on the
balance sheet with Accounts Receivable. Allowance for Doubtful Accounts is a contraasset account so that is what we calculated. The adjusted balance in Allowance for
Doubtful Accounts should be $31,800. Since the current balance is $17,000, we need to
increase the balance to $31,800. We do this by crediting the account $14,800. The
$14,800 is the amount of Bad Debt Expense that must be recorded.

What is a negotiable instrument? Notes receivable bc it cannot be transferred

Calculating interest
Characteristics of a plant asset: Property, plant, and equipment have several important
characteristics:
- A relatively long life
- The production of income or services over its life
- Tangibilityhaving physical substance
Plant assets are long-lived assets that are used in normal business operations in the production of
income. They are not held for resale to customers

How long do you depreciate land improvements?: Cannot depreciate land but can
depreciate the improvements by the amount of years given
Calculations find the depreciating
Which method of depreciation is production based? Units of activity
What is the book value?
Accruing interest and financial statements cut off dates know how to do, it record it,
what the entry is on the final payment date: Accrued expenses are expenses that
have occurred but are not yet recorded through the normal processing of
transactions. Since these expenses are not yet in the accountant's general ledger,
they will not appear on the financial statements unless an adjusting entry is entered
prior to the preparation of the financial statements.
Here is an example. A company borrowed $200,000 on December 1. The agreement
requires that the $200,000 be repaid on February 28 along with $6,000 of interest
for the three months of December through February. As of December 31 the
company will not have an invoice or payment for the interest that the company is
incurring. (The reason is that all of the interest will be due on February 28.)
Without an adjusting entry to accrue the interest expense that the company has
incurred in December, the company's financial statements as of December 31 will
not be reporting the $2,000 of interest (one-third of the $6,000) that the company
has incurred in December. In order for the financial statements to be correct on
the accrual basis of accounting, the accountant needs to record an adjusting entry
dated as of December 31. The adjusting entry will consist of a debit of $2,000 to
Interest Expense (an income statement account) and a credit of $2,000 to Interest
Payable (a balance sheet account).
78 questions

Magazine subscriptions go through slides on that

Bonds:
When a company issues bonds, it must record the amount of cash received and the
corresponding liability. Recording the liability is the easiest part because the liability is
always equal to the face value of the bond. To determine how much cash will be
received, we need to know if the bond will sell for par value.
A bond will sell for par value if the stated interest rate is equal to the market rate. If that
is the case, the company will receive cash equal to the face value of the bond.
Example #1
Hill and Valley, Inc. issues $400,000 worth of 10-year, semiannual, 8% bonds on
December 1. The market rate at the time of issuance is also 8%. Record a journal
entry for the issuance of the bonds.
Since the stated interest rate and the market rate are the same, these bonds will be sold
at face value. The journal entry for a par value bond, like this one, is fairly simple. The
accounts will be Cash, to record the increase in cash, and the liability will be called
Bonds Payable. The amount of the entry is the face value of the bond.

Discount

When the market rate is not the same as the stated or contract rate, the bond payable
and cash will not be the same. If the market rate is higher than the stated rate, that
means people are not willing to pay as much for the bonds. Either there is risk
associated with the company or there are better investments elsewhere. In order to
entice the public to buy the bonds, the company must offer a discount on the bonds.
The company will receive less cash than face value. The difference between the face
value of the bond and the cash received is called the bond discount or discount on
bonds payable.
Example #2

Hill and Valley, Inc. issues $400,000 worth of 10-year, semiannual, 8% bonds on
December 1. The market rate at the time of issuance is 10%; therefore, the bonds
will only bring $350,152. Record the journal entry for the issuance of the bonds.
In this case, the market rate is higher than the stated rate which means that the bonds
will sell for less than face value.If the public can get 10% elsewhere, why would they
pay full price to only receive 8%? They wouldnt. So while the bond will pay $400,000 at
the end of the 10-year term, the bond is only worth $350,152 right now (we will discuss
how you calculate that number later in the material).
The difference between the amount of cash received and the liability is called Discount
on Bonds Payable. This is a contra-liability, linked to Bonds Payable. Since Discount on
Bonds Payable is a contra-liability, the normal balance is a debit. This makes sense
because we need something to add to Cash on the debit side to balance out the
$400,000 Bond Payable.

Carry bonds and premiums

When a company offers a bond at a higher interest rate than the market expects, the
public is willing to pay more for the bonds. This causes more cash to come in than the
amount of the liability. In cases like this, we say that the bond sells for a premium.
Why would a company offer a bond at a premium? This can occur when the company
offers a slightly higher interest rate than the market rate or when the company is so
stable that it is almost certain that the creditors will be repaid. In todays record low
interest rate environment, the public is willing to spend a bit more money up front to get
a better interest rate.
When a bond sells for a premium, the amount of cash generated from the sale is higher
than the liability. In order to balance the journal entry, we create an account called
Premium on Bonds Payable. This is an additional liability that attaches to Bonds
Payable, just like a contra-account would. However, because the normal balance in
Premium on Bonds Payable is a credit balance, it is not considered a contra-liability.
Example #3

Hill and Valley, Inc. issues $400,000 worth of 10-year, semiannual, 8% bonds on
December 1. The market rate at the time of issuance is 6%; therefore, the bonds
will bring $459,512. Record the journal entry for the issuance of the bonds.
Because more cash is generated from the sale than the amount of the outstanding
liability, the bonds are selling at a premium. The company will receive $459,512 in Cash
but the Bond Payable is only $400,000. The amount of the premium is $59,512 (we will
discuss how to calculate the premium later in the material). Cash is increasing, the
Bond Payable is increasing and the Premium on Bonds Payable is increasing.

Business stock holders elected --- board of directors

Statement of cash flowswhat is it -- is a financial statement that shows how changes in
balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to
operating, investing and financing activities.

Acquisition of land exchange for common stock is ---- not a cash activity
Changes in accts receivable how does it impact cash flow: Changes in accounts

receivable on the balance sheet from one accounting period to the next must also be
reflected in cash flow. If accounts receivable decreases, this implies that more cash has
entered the company from customers paying off their credit accounts - the amount by which
AR has decreased is then added to net sales. If accounts receivable increases from one
accounting period to the next, the amount of the increase must be deducted from net sales
because, although the amounts represented in AR are revenue, they are not cash.

International standards are referred to as: International financial reporting standards

(IFRS)
IFRS considered more principle based and less ruled besed than GAAP
Us standards are referred to as something different: generally accepted accounting
principles (GAAP)
Internal control standards applicable to Sarbanes-Oxley are applied to what: only
large public companies listed on the us exchange

What would vary in different countries would statements prepare using ifrs and
financial reporting statements

IFRS recommends but does not require the use of the title statement of financial
position rather than balance sheet.

The format of statement of financial position information is often presented differently

under IFRS. Most companies that follow IFRS present statement of financial position
information in this order:
1.

Noncurrent assets

2.

Current assets

3.

Equity

4.

Noncurrent liabilities

5.

Current liabilities

Under IFRS, current assets are usually listed in the reverse order of liquidity.

Some companies report the subtotal net assets, which equals total assets minus total
liabilities.

IFRS has many differences in terminology. In the investment category stock is called
shares, and common stock is called share capitalordinary.

Both IFRS and GAAP require disclosures about (1) accounting policies followed, (2) judgments
that management has made in the process of applying the entitys accounting policies, and (3)
the key assumptions and estimation uncertainty that could result in a material adjustment to
the carrying amounts of assets and liabilities within the next financial year

What is the big variable? Monetary units has to be in dollars

10% of questions will come from 22 slides on Professional financial reports sections
( a letter grade and easy questions)
Double declining balance on problem number 75 how to calculated how much of
your time do you want to spend on that question (straight line X2 first year) next
one on this is theory based

_owners of_ chain corporation--- stock holders

Which user of accounting information have a direct financial access
Internal users
Balance sheet ---- what is it whats on it what period covered on the balance sheet

A balance sheet is a financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time. These three balance sheet segments give
investors an idea as to what the company owns and owes, as well as the amount invested
by shareholders.
The balance sheet adheres to the following formula:
Assets = Liabilities + Shareholders' Equity
The last day of the accounting period a selfie of the end of the time snapshot

Annual reports --- four elements of the annual report--- who uses the annual report
Financial statements, management discussion and analysis, notes to the
financial statements and Auditors report
notes to financial statements---property plant and equipment
Land held for future use is a what? Another asset just not current but long term
investment
What is the accounting equation? Assets = L + SH
What is revenue recognize? When earned
When are expenses recognize? When it accrues
Earnings per sharegives you the formulas on the font of the exam
Current assets identify from a list
Current ratio, dept to asset ratio, while he gives the accounts you have to find out
which to use to calculate
Major!! Give you Current assets and current liability--- if they pay 250000 off their
accounts payable by cash what is the new current ratio --- take from both sides--current assets and liability both go down if you pay cash bc you lose money and
your paying your accounts payable so they go down too softball question
Free cash flow- easy one formula on front page
Accounting equationif I give you that current liability decreases by 4000 what
happens---- assets go down to or SE goes up----has to be balanced
Expense does what to SEgo down
Revenues does what to SE---go up

Rolling forward SE--- gave you the end balance to balance to common stock to
retained earnings and the transactions to each individual stock, retained earnings,
dividends, what is the ending balance

1st months operations for a company dealing with cash, first month you start off
with nothing, what is the ending balance? Basically everything you earn minus
what you had to pay off
Hard 1st step in the transaction record process what do you do? Analyze the
transaction,
Unearned service revenue account---a liability
In a service business revenues is recognized---- when its preformed
Adjusting journal entries for previous hours not doing payroll taxes
Recording interest expense--- what can you get away with at least 5-6 times (idk
what this means)
If you have an asset account given the beginning and ending balance.. if I give
you another year and another year lets say its AR just pretend, what impacts AR ---sales on credit (go up) , collections ( go down), getting cash (goes down) Writeoffs
(go down) pretend I give you 123 and you solve for 4 (know which way it impacts
the balance)

Difference between a firm and __ IDK but maybe service company and firm and
answer would be what they sell example merchandize
How many entries is recorded when you have a sale in perpetual inventory
system--- every time there is a sale two entries --- one to record the sale and the
other to adjust inventory cost of goods sold
Calculating the discount of purchases and receivables
Profit margin ratio
Whats the entry to do return using the periodic system
On August 14, Medici Music returns $700 worth of merchandise to Whistling Flutes, LLC
because the wrong merchandise was received. The merchandise cost Whistling Flutes
$400.
First, the entry for Medici Music:

Now, the entry for Whistling Flutes:

What the _____- the physical calender we are in --- legal title __ inventory
Ending inventory using LIFO
cost of goods sold using LIFO
In a period of rising prices in which inventory of flow assumption will result in the
lowest amount of tax expense--- (got to assume rising process inflation)answer
FIFO
Lifo gives the highest net income
FIFO gives the lowest net income
Check cleared in bank and reconciliation --- Check clearing is it still outstanding?
tricky