ECON 3B Midterm Notes

# ECON 3B Midterm Notes - Sheet1 Page 1 A company usually...

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Unformatted text preview: Sheet1 Page 1 A company usually determines the amount of supplies used during a period by taking the difference between the balance of t supplies on hand. Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages ar this often leads to WAGES PAYABLE appearing on the balance sheet at the end of the first period. At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the follo-- LIABILITIES AT THE END OF THE YEAR ARE UNDERSTATED Colt Company sells merchandise on account for \$1,800 to James Company with credit terms of 2/10, n/30. Jones Company re along with a check to settle the account within the discount period. What is the amount of the check?-- \$1,470 TO CALCULATE THIS NUMBER: (1,800 - 300 = 1,500) because James Company doesn't want \$300 of the merchandise (1,500 * .02 = 30) because James Company is getting a 2% discount because of the credit terms (1,500 - 30 = 1,470) the total cost with the discount The compounding effect of interest causes the amount of interest to grow EXPONENTIALLY GREATER A company using a perpetual inventory system that returns goods previously purchased on credit would DEBIT ACCOUNTS P If a company sells goods for \$100,000, but the payment will not be made for 5 years and there is no interest, GAAP requires If a purchaser using a perpetual inventory system pays the transportation costs, then the MERCHANDIS INVENTORY ACCOUNT IS INCREASED If a resource has been consumed but a bill has not been received at the end of the accounting period, then AN ADJUSTING A company using the periodic inventory method has \$50,000 of opening inventory and during the month purchased \$300,000 \$200,000 of inventory. What was the cost of the goods sold during the period 150,000 = 50,000 + 300,000 - 200,000 COGs = BEGINNING INVENTORY + PURCHASES - ENDING INVENTORY Income from operations appears on a MULTIPLE-STEP income statement. GROSS PROFIT : Assume we pay full price on all items, no discounts taken GROSS PROFIT RATE = GROSS PROFIT / NET SALES PROFIT MARGIN RATIO = NET INCOME / NET SALES QUALITY OF EARNINGS RATIO = NET CASH PROVIDED BY OPERATING EXPENSES / NET INCOME Sheet1 Page 2 NET SALES : The amount of sales generated by a company after the deduction of returns, allowances for damaged or missin Where did Anderson think he had to go since the last exam (a town mentioned in lecture) but was grateful to learn that he did Employees at B Corporation are paid \$5,000 cash every Friday for working Monday through Friday. The calendar year accou 31. How much salary expense should be recorded two days later on January 2? How much salary expense should be recorded two days later on January 2?...
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ECON 3B Midterm Notes - Sheet1 Page 1 A company usually...

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