# Accounting Final

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1. Calculate Interet
Interest (I) = Principal ℗ * Interest Rate ® * Time (T)
2. Notes Receivable Journal Entry
• dr notes receivable
•   cr cash
3. Journal Entry for receiving a cash interest payment
• dr cash- getting money
•   cr Interest Receivable
•   cr Interest Revenue
4. Adjust Journal entry to record interest receivable
• dr Interest Receivable
•   cr Interest Revenue
5. Journal entry for receiving principal
• dr cash
•   note receivable
6. Credit Purchase for rides and equipment journal entry
• dr Rides and Equipment
•   cr Cash
•   cr Notes Payable
7. Depreciation expense journal entry
• dr depreciation expense
•   cr accumulated depreciation
8. Striaght Line Method
Accumulated depreciation increases by an equal amount each year

( Cost - Residual value ) * 1/ useful life= Depreciation expense
9. Unit Of Production Method
When usage varies each period

(Cost-Residual value) * Actual production this period/ Estimated total production= Depreciation expense
10. Declining Balance Method
When the asset is more efficient in early years but less so over time
11. Double Declining Balance Formula
( Cost - Accumulated Depreciation ) * 2/useful life= Depreciation Expense

Shows declining amounts of depreciation as the asset ages
12. Impairment
• dr Loss on impairment
•   cr Rides and Equipment- (Ex)

Occurs when events or changed circumstances cause the estimated future cash flows from a long-lived asset to fall below its book value.
13. Original cost - Accumulated depreciation =
Book Value
14. Loss on Disposal is debited when
The selling price is lower then the book value
15. Loss on Disposal is credited when
The selling price is higher than the book value
16. Intangible Assets
Have limited life, no value at the end of their lives.
Special name, image or slogan identified with a product or company. ( e.g, Mcdonalds)
18. Patent
A right to exclude others form making, using, selling, or importing an invention
19. Licensing Right
Limited permission to use property according to specific terms and conditions set out in a contract
20. Goodwill
The premium a company pays to obtain the favorable features association with another company
21. Acquisition
The cost of intangible assets are recorded as assets only if they have been purchased
22. Net Assets =
assets - liabilities
23. Amortization
Process by which allocating the cost of intangible assets over their limited useful life.  Trade marks and goodwill are not amortized
24. Journal entry for amortization
• dr Amortization expense
•   cr Patents
25. Fixed asset turnover ratio
Net rev./ Ave. net fixed assest

To find ave net fixed asset add be. and ending balances in fixed assists
26. EBITDA
earnings before interest, taxes, depreciation and amortization
27. Depletion
Allocating a natural resources cost over the period of its extraction or harvesting
28. New depreciation using straight line method
Book value- New residual value * 1/ remaining life = depreciation expense
29. Accrued liabilities
Unpaid expenses ex: income tax, electricity
30. Employer payroll taxes journal entry
• dr Payroll deductions
•   cr FICA Payable
•   cr Federal unemployment tax payable
•   cr State unemployment tax payable
31. Net Pay =
Gross earnings- payroll deductions
32. Interest =
Principal℗ * Interest Rate ® * Time (T)
33. Adjusting entry to record \$ of interest expense that is payable at a certain date
• dr interest expense
•   cr interest payable
34. Record interest paid
• dr Interest Payable
• dr Interest Expense
•   cr Cash
35. Record Principal Paid
• dr Notes Payable
•   cr Cash
36. Sales Tax Payable
• dr Cash
•   cr Sales tax payable
•   cr Salves Rev.
37. Receive cash and create a liability- unearned rev
• dr Cash
•   cr Unearned Rev.
38. Full fill part of the liability and earn revenue
• dr Unearned Rev.
•   cr Concert Rev. - ( Ex )
39. Bonds
Future payments a company promises to make in exchange for receiving a sum of money now
40. Bonds from a company's perspective
Bond is a long term liability
41. Bond form bondholder's perspective
Bond is an investment
42. Maturity Date
Date on which the bonds are due to be paid in full
43. Stated interest rate
The rate stated on the face of the bond, which is used to compute interest payments
44. Interest Payment =
Face value * stated interest rate
45. Issue Price
The amount of money a lender pays when a bond is issued
Amount by which a bonds issue price exceeds its face value
47. Discount
Amount by which a bonds issue price is less then its face value
48. Bonds issued at face value journal entry
• dr Cash
•   cr Bonds Payable
49. Bonds issued at a premium journal entry
• dr Cash
•   cr Bonds Payable
•   cr Premium on bonds payable
50. Bonds issued at a discount journal entry
• dr Cash
• dr Discount on bonds payable
•   cr  Bonds Payable
51. Market interest rate
The rate of interest that investors demand from a bond
52. Carrying value
Amount of the bonds liability after taking into account any premium or discount
53. If the market interest rate is low will the bondholder pay more or less then face value?
More then
54. Interest on bonds issued at face value
• dr Interest expense
•   cr Interest payable
55. Bond amortization
Makes the interest expense smaller than the actual interest payment, and causes premium on bonds payable to decline each period
56. Retirement ( Paid Off ) at maturity journal entry
• dr Bonds payable
•   cr Cash
57. Early retirement journal entry
• dr Bonds Payable
• dr Loss on Bond retirement
•   cr Cash

- Company pays cash which eliminates bond liability
58. Contingent Liabilities
Potential liabilities that have arisen as a result of a past transaction or event
59. If the liability is probable journal entry
• dr Product Litigation expense
•   cr Product Litigation liability
60. Quick ratio
Whether liquid assets are sufficient to pay current liabilities.  The higher the number the better able to quickly pay.
61. Times interest earned ratio
Whether sufficient resources are generated to cover interest costs.  It is not good when the ratio is less then 1.0
62. Straight line method of amortization
Reduces the premium or discount by an equal amount each period
• dr Interest expense          \$ 4,290
• dr Premium on bonds payable  \$ 1,710
•   cr Cash                                     \$ 6,000
64. Bonds discount journal entry
• dr Interest expense               \$ 7,470
• dr Discount on bonds payable  \$ 1,470
•   cr Cash                                      \$ 6,000
65. Effective interest method of amortization
Calculates interest expense by multiplying the true cost of borrowing * the amount of money actually owned ( carrying value ) by investors
66. Interest expense =
Carrying value * Market interest rate * n/12
67. Shortcut
Combine discount or premium with the bonds face value into a single account called bonds payable, net

• dr Cash
•   cr Bonds payable, net
68. What benefits do owners of common stock have
• 1. Vote on major issues
• 2. Receive share of the corporations profits when distributed as dividends
• 3. If the company ceases operation the stockholders share in any assets remaining after credits have been paid
• 4. Given the first chance to buy newly issued stock
• 1. Equity does not have to be repaid
• 2. Dividends are optional
• 1. Interest on debt is tax deductible
• 2. Debt does not change stockholders control
71. Stockholders equity section in the balance sheet
Contributed capital, retained earnings, treasury stock, accumulated other comprehensive income
72. Authorized Shares
Maximum number of shares of capital stock of a corporation that can be issued
73. Issued stock
Shares of stock that have been distributed by the corporation
74. Treasury stock
Issued shares that have been required by the company
75. Outstanding stock
Shares that are currently held by stockholders

= Issued stock - Treasury stock
76. Par Value
Insignificant value per share of capital stock specified in the charter
77. NO par value stock
Capital stock that has no par value specified in the charter
78. Stock issuance journal entry
• dr Cash                      \$1,000,000
•   cr Common stock          \$1,000
•   cr Additional paid- in - capital   \$ 999,000
79. Repurchase of stock journal entry 50,000 at \$25
• dr Treasury stock
•   cr Cash
80. Reissuance of treasury stock journal entry
Company

The company repurchased stock at \$25 per share.  Reissued 5,000 shares of this treasury stock at \$28.
• dr Cash                       140,000
•   cr Treasury stock            125,000
•   cr Additional paid in capital   15,000
81. If the treasury stock were reissued at a price below its repurchase price, the journal entry is

reisuance at \$23
• dr Cash                             115,000
• dr Additional paid in capital      10,000
•   cr Treasury stock                  125,000
82. Declaration date
The date on which  the board of directors officially approves the dividend
83. Dividends declared journal entry
• dr Dividends declared
•   cr Dividends payable
84. Dividends payable journal entry
• dr Dividends payable
•   cr Cash
85. Stock dividend
• dr Retained earning
•   cr Common stock

It reduces market price per share of stock and it reduces retained earnings
86. Stock split
Increase in the total number of authorized shares by a specified ratio.  Does not effect RE or cash.  ( ex: 0.001 to 0.005 )
87. Preferred stock
Dividends must be paid art a fixed rate.  Carries priority over common stock
88. Preferred stock issuance journal entry
• dr Cash                           50,000
•   cr Preferred stock               10,000
•   cr Additional paid - in capital - preferred  40,000
89. Earnings per share
Amount of income generated for each share of common stock owned by stock holders.  A higher ratio means greater profitability.
90. Return on equity
Amount of income earned for each dollar.  A higher ratio means stockholders are likely to enjoy greater returns
91. Price. earnings ratio
How many times more than the current years earnings  investors are willing to pay for a company's common stock.  A higher number means investors anticipate an improvement in the companies future results
 Author: Dp ID: 289576 Card Set: Accounting Final Updated: 2014-12-08 01:26:08 Tags: Accounting Final Folders: Accounting Final Description: Accounting Final Show Answers: