Exam 2 Study Guide (9 pages)

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Exam 2 Study Guide



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Exam 2 Study Guide

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Pages:
9
Type:
Study Guide
School:
University of Arizona
Course:
Acct 200 - Introduction to Financial Accounting
Edition:
1

Unformatted text preview:

ACCT 200 1st Edition Exam 2 Study Guide Lectures 11 14 Lecture 11 Sales discount incentive to pay quickly 2 10 n 30 means customer receives 2 discount if they pay within 10 days no discount if over 10 days still must be within 30 days Sales discount contra revenue account debit balance reduces revenues Write off means the company is never going to receive the money Balance of uncollectible accounts means either overestimated last period still waiting on some accounts receivable Acct receivable transactions Sales Sales return Sales discount Trade discount Collection from customer w out discount Receivables value on balances at true collectible value net realizable value Set up contra asset account allow for uncollectible accounts Lecture 12 Matching bad debt expense is recorded in same year as revenues H Jones company goes bankrupt so 1000 they owe will never get paid write off the account removes acct receivable and reduces allowance for uncollectable acct Allow for uncollectable acct Acct receivable 1000 1000 90 000 in acct receivable 5 uncollectable 90 000 05 4500 in allow acct as end balance E 5 18 Walmart begin acct receivable 1715 end acct receivable 2662 net credit sales 312 427 Find receivables turnover ratio Step 1 average 1715 2662 2 2188 5 Step 2 calculate turnover net credit sales average acct receivable 312 427 2188 5 142 759 times Step 3 average collection period 365 turnover 365 142 759 2 6 days Important notes Interest rates are always annual for this class don t forget to adjust calculations for interest based on how many months are included Know accrued interest slides 5 38 5 39 for exam Lecture 13 Cost of goods sold only expense that doesn t have the word expense Walmart buys pencils for 80 sells for 2 8 is cost of goods sold Specific identification won t have to do calculations just know definition FIFO best method LIFO good for tax purposes to save money 10 15 of companies use LIFO isn t allowed internationally Weighted Average Cost simplest If



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