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ACC201Exam2Review - ACC 201 Exam#2 Spring 2008 Material...

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Unformatted text preview: ACC 201 Exam #2 Spring 2008 Material Covered Textbook Chapters Chapter 5 Chapter 7 Chapter 8 Chapter 9 Chapter 5 Accounting for Inventories What makes up inventory FOB Shipping vs. FOB Destination Inventory Valuation Methods Calculating COGS Financial Statement Effects of Costing Methods Chapter 7 Accounting for Receivables What are receivables? Valuation of Accts. Receivable Direct Write-off Method Allowance Method Types of Allowance Method to Estimate Bad Debts expense Journal Entries Associated with Recording A/R adjustments Summary % of Sales Emphasis on Matching Sales Bad Debts Exp. % of Receivables Emphasis on Realizable Value Accts. Rec. All. for Doubtful Accts. Aging of Receivables Emphasis on Realizable Value Accts. Rec. All. for Doubtful Accts. Income Statement Focus Balance Sheet Focus Balance Sheet Focus Chapter 8 Long-Term Assets Definition of Plant Assets Factors in Computing Depreciation What is included in COST? Methods of Calculating Depreciation Factors in Computing Depreciation The calculation of depreciation requires three amounts for each asset: 1. Cost 1. Salvage Value 2. Useful Life Cost Determination Purchase price Acquisition Cost All expenditures needed to prepare the asset for its intended use Acquisition cost is net of any cash discounts but excludes financing charges. Land Title insurance premiums Purchase price Delinquent taxes Real estate commissions Title search and transfer fees Surveying fees Land is not depreciable. Depreciation Methods 1. 2. 3. Straight-line Units-of-production Declining-balance Straight-Line Method Depreciation Cost Salvage Value = Expense for Period Useful life Units-of-Production Method Step 1: Depreciation Per Unit = Cost Salvage Value Total Units of Production Step 2: Depreciation Expense = Depreciation Per Unit Number of Units Produced in the Period Double-Declining-Balance Method Step 1: Straightline = 100 % Useful life = 100% 5 = 20% rate Step 2: Doubledeclining = 2 Straightline rate = 2 20% = balance rate 40% Step 3: Depreciation expense Doubledeclining = balance rate Beginning period book value 40% $50,000 = $20,000 for 2008 Chapter 9 Current Liabilities What is a Liability Current vs. Long-term Types of Current Liabilities Payroll Liabilities Warranty Liabilities Journal Entries Associated with Warranties Known (Determinable) Liabilities Accounts Payable Sales Taxes Payable Unearned Revenues ShortTerm Notes Payable Payroll Liabilities MultiPeriod Known Liabilities Employee Payroll Deductions Gross Pay FICA Taxes Medicare Taxes Federal Income Tax State and Local Income Taxes Voluntary Deductions Net Pay Employer Payroll Taxes FICA Taxes Medicare Taxes Federal and State Unemployment Taxes Employers pay amounts equal to that withheld from the employee's gross pay. Warranty Liabilities Seller's obligation to replace or correct a product (or service) that fails to perform as expected within a specified period. To conform with the matching principle, the seller reports expected warranty expense in the period when revenue from the sale is reported. ...
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