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Acct. 2331: Accounting Equations
Accounting equation |
assets = liabilities + s.equity |
stockholder's equity |
Revenue - Expenses - Dividends |
net income |
revenues - expenses |
interest |
face value
x
annual interest rate
x
fraction of the year |
acid (quick) ratio |
(cash + sh. invest + net receivables)
_____________________________
total current liabilities |
current ratio |
(current assets)
___________________
(current liabilities)
less than 1 not good
ratio high = risk low |
debt ratio |
total liabilities / total assets
ratio high = high risk |
net working capital |
current assets - current liabilities |
current ratio |
cash + accts receiv + supplies
______________________________
payables + unearned rev |
debt ratio |
accts payable + unearned rev
_____________________________________________
cash + accts receiv + supplies + equip + building
|
bank reconciliation |
deposit (+)
check (-)
bank error (+/-) |
Cash/ Company Reconciliation |
interest earned (+)
notes received (+)
service fee (-)
nsf check (-) |
DEALOR
(debit side) |
debits increase
credits decrease
dividends
expenses
assets |
DEALOR
(credit side) |
credits increase
debits decrease
liabilities
owner's equity
revenue |
Percentage of Sales |
allowance for uncollectible accounts
=
total credit sales x % estimated to be uncollectible |
Age of Receivables |
allowance for uncollectible accounts
=
total accounts receivable x
% estimated to be uncollected |
Adjusting entry for uncollectible accounts at the end of the year |
uncollectible accounts expense (bad debt)
allowance for uncollectible accounts |
day's sale in receivable |
average receivables
/ sales per day |
Entry for bad debt expense |
bad debt expense
allowance for uncollectible accounts |
write off uncollectible accounts |
allowance for uncollectible accounts
accounts receivable |
Net sales |
total sales
- sales return
- sales allowance
- sales discount |
inventory turnover ratio |
cost of goods sold/ average inventory |
gross profit ratio |
gross profit / net sales |
sales revenue |
# units sold x Cost |
discount bond |
market > stated |
premium bond |
market < stated |
Bond at face value |
market = stated |
Principle payment (single payment) |
PV of single |
Interest payment (flow of payments) |
PV of annuity |
interest payable |
face value x
stated interest rate
x fraction of the year outstanding |
carrying value with discount |
face value - amortized discount |
carrying value with premium |
face value + amortized premium |
interest payment on a bond |
D: interest expense
C: bonds payable
C: cash |
Cost of Goods Sold |
Sales Revenue - Gross profit |
gross profit |
sales revenue - COGS |
net income |
gross profit -
operating expense |
operating expense |
gross profit - net income |
FIFO |
Inv sold = first units
inv not sold = last remain. units |
LIFO |
Inv sold = last units sold
Inv not sold = first units not sold |
Average cost |
total sales revenue / total units
then units x avg cost |
operating activities |
gain sale: ADD
decreas accts receiv: ADD
decrease salaries pay: SUB
Depreciation expense: ADD
increase prepaid rent: SUB
loss on sale asset: ADD
increase accts payable: ADD
increase inventory SUB
increase operating expense payable ADD
increase income tax ADD |
issue bond at par |
cash
bonds payable
|
issue at premium |
cash
premium
bonds pyable |
issue at discount |
cash
discount
bonds payable |
issue # units @ par Common stock $#/ share |
cash (shares x $/share)
common stock (shares x par value)
paid cap excess par (cash - cs) |
issue shares of $# par value preferred stock $#/share |
cash
preferred stock
capital excess par |
amoritization |
cash paid: face x stated
interest expense: c.Value x market
increase/decrease in CV: 2-3
CV: prior carrying (- if premium)/ (+ if discount) |
return on equity |
net income - preffered dividends/ avg c.s.euity |
return on assets |
net income/ avg total assets |
arnings per share |
net income - divdends preffered stock / weight avg cs outstand |