Accounting Final

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-land purchased for $510,

000 4 yrs ago
-owner has long term debt
that relates to purchase of
this land
-owner plans to sell land
for 850,000
-avg selling price=790,000
for past year
-what is fair value of the
land?

790,000

2.

Accounts payable (123)

balance sheet, current

liabilities, credit

3.

accounts receivable (123)

balance sheet, asset, debit

average income tax rate

(equation)

income tax expense/income

before income taxes

5.

capital stock (A, L, or OE)

owners equity

6.

cash (123)

balance sheet, asset, debit

7.

cash (A, L, or OE)

asset

characteristics of a retailer
on a balance sheet (2)

-no receivables
-high inventory

characteristics of debt
financing (3)

-right to receive capital at

future date
-right to share any remaining
resources if business is
terminated
-right to force the business in
to bankruptcy if interest is not
paid

1.

4.

8.

9.

10.

16.

17.

18.

characteristics of equity
financing

-right to share in profits of

business
-right to share any remaining
resources when business is
terminated
-right to have a say in affairs
of the business

characteristics of the
balance sheet for a bank

-largest category =receivables

-largest source of financing is
NOT equity

19.

20.
21.

22.

23.

24.

25.
26.

27.
11.

12.

company profit if they sell

for $1

net income/sales

company sells for $1-how

much did they pay for it?

COGS/sales

company sells product for

$1, how much profit?

net income/sales

compute retained earnings

at the beginning of the year

(use chart)

28.

29.
13.

14.

15.

30.

31.

compute
retained
earnings at the
end of the year

retained earnings (beginning)+net

income-dividends=retained earnings
ending

compute the
change in
retained
earnings

net loss (total revenue-total expenses)dividends=change in retained earnings

corporations

-separate legal entire apart from owners

-one or more owners
-separation of business and personal
taxation (double taxation)

cost of goods
sold (123)

income statement, expense, debit

define revenue

measure of economic value created

describe
accounts
payable

obligation arising from the purchase of an

inventory on account

describe
berkshire
hathaway

large company that owns a controlling

interest in many operating subsidiaries
and also owns smaller investments in a
number of large corporations

describe
inventory

goods purchased and held for resale

describe the
entity concept as
it applies to a
small sole
proprietorship

balance sheet should have assets and

liabilities of the business operations
themselves and should not include any
personal assets or obligations

dividends (123)

income statement, owners equity, debit

the entity
concept

personal expenditures of company owners

(purchase of personal use items: food,
cars, etc) should not be reflected as assets
or expenses in the companies financial
statements

equation for
assets

assets=liabilities+owners equity

equation for
earnings per
share

net income/# of shares outstanding

equipment
(document, type,
deb/credit)

-balance sheet
-asset
-credit

expenses (123)

-income statement
-expense
-debit

financial
accounting

-seeks to provide info. for current or future

providers of capital
--accomplished through financial
statements (historical info.)

32.

33.

34.

35.

36.

37.
38.

39.

40.

41.

42.

43.

44.

Given total cost of sales and

total sales, how do you find
the wholesale purchase for
$1?

total cost of sales/total sales

gross income (123)

-income statement
-revenue
-credit

inventory (A, L, or OE)

asset

49.

Land (A, L, or OE)

asset

long-term debt (notes payable)

(123)

-balance sheet
-liability
-credit

Managerial accounting

seeks to provide
information to assist
managers in effective
operation of the business
through customized
management reports
-more detailed and may
include future budgets and
forecasts
--not available for public

name a company likely to have

a large amount of bad debt
expense

zions bank

Name a company who has

recorded a large lability in its
balance sheet for which
customers have paid but the
company has not yet delivered

United airlines

name a company with a large

amount of depreciation

exxon mobil

Name that company:

receivables=$734

Wells Fargo or Zions

bank

name two companies with a

high cost of goods sold

-home depot
-walmart

57.

net income (123)

-balance
-owners equity
-credit

58.

net income (e)

revenue-expenses

59.

paid in capital (123)

-balance sheet
-owners equity
-credit

60.

partnership

-more than one owner

-no separation between
business and personal
liability
-same as proprietorship
but more owners

61.

Prepaid expense (123)

balance sheet, asset, debit

62.

proprietorship

-one owner
- no separation of
business and personal
liability
-no separate income
taxation

50.

How are prepaid expenses

reported on financial
statements?

asset

how do you find income

before income taxes?

gross profit (sales -COGS)operating income

(expenses)-interest
expense=income before tax
expense

How do you find net

income?

revenue-expenses

how do you find net income?

revenues (sales)-expenses

How do you find the ending

balance in retained earnings
from a trial balance?

retained earnings+net
income-dividends

how do you find total

liabilities?

Assets-owners
equity=liability
(assets=liabilities+owners
equity)

51.

52.

53.

54.

how do you find wholesale?

cost of sale (COGS)/net sale

(sales)=wholesale

55.

how does walmart finance

most of its inventor
purchases?

accounts payable

56.

how does Walmart finance

most of its inventory
purchases?

accounts payable

how to compute net income

when given a list of data

revenues-expenses=net
income

how to find income tax rate

income tax expense/

income before income taxes
(answer= a %)

how to find tax on

shareholders dividend
-ex: income before
taxes=$5,000,000 tax= 40%
What is the total income tax
paid by shareholders?

$5,000,000*.4=2,000,000
remaining profit:
5,000,0002,000,000=3,000,000 (to
shareholders)
3,000,000*.4=1,200,000

46.

interest payable (123)

-balance sheet
-liability
-credit

47.

inventory (123)

-balance
-asset
-debit

45.

48.

purpose of financial statements (what are they

and what do they show?)

-statement of cash flows

-income statement
-balance sheet

64.

research and development expense (123)

-income statement
-expense
-debit

65.

retained earnings

cumulative amount of net income kept in the business expansion

66.

retained earnings (123)

-balance sheet
-owners equity
-credit

67.

retained earnings (A, L, or OE)

owners equity

68.

retained earnings (e)

net income-dividends

69.

return on sales (profit) (e)

net income/sales

70.

sales revenue (123)

-income statement
-revenue
-credit

71.

taxes payable (123)

balance sheet, liability, credit

72.

unearned revenue (123)

balance sheet, liability, credit

73.

utilities payable (123)

-balance sheet
-liability
-credit

74.

wages payable (123)

-balance sheet
-liability
-credit

75.

what is retained earnings?

the cumulative amount of income taxes paid on behalf of shareholders

76.

what is the reason for GAAP?

to create comparable informaiton

77.

what is walmarts largest source of financing?

retained earnings

78.

who hires who in corporate management

shareholders-(elect)-board of directors-hires-top management personnel-hiresother employees--produce profits for owners

79.

who selects a corporations board of directors?

shareholders

63.