ACCT 401 Exam 3

order of accounts on financial statements:

Assets by liquidity

liabilities by due date

stockholders equity by chronology (contributed, then earned)

revenues by financial significance

expenses by financial significance

Accumulated other comprehensive income

SE, SSE & balance sheet, CR, Perm, F/O

account link - net income

Asset retirement obligation ARO

Liability, Balance sheet, Cr, LT, Perm, F

Billings on construction contracts

Contra Asset, balance sheet, Cr, current, perm, O

Account link - revenue on LT contracts

Construction in progress (INV)

Asset, balance sheet, Dr, current, perm, O

Account link - cost of construction

current maturities of long-term debt

liability, balance sheet, cr, current, perm, F

account link - interest expense

discount on notes receivable

contra asset, balance sheet,

what is accounts payable account link

COGS through inventory

what is account receivable account link

service / sales revenue

what is accrued liablilities account link

XXXX expense (operating)

what is inventorys account link

COGS

what is notes payable account link

interest expense

what is notes receivable account link

interest revenue

what is tanngible PPE account link

accumulated deprecation

Order of the financial statements and the flow

Income statement: net income

statement of stockholders equity: ending balance

balance sheet:

Statement of cash flows

WAAE

weighted average accumulated expenditures

on a non cash exchange what do you compare

Book value to fair value

book value > loss

Book value < gain

Loss - DR

Gain - CR

difference in calculating inventory CH 21

• Direct method → uses COGS to figure out cash paid to suppliers

• Indirect method → ignores COGS and adjusts using inventory + A/P changes

what is book value

orignal cost - accum deprecation

Book value is the value of an asset, company, or equity as recorded on the balance sheet

what is fair value

Fair value is the price that an asset could be sold for, or a liability could be settled for, in an orderly transaction between knowledgeable, willing parties at the measurement date.

what is goodwill

is an intangible asset that arises when one company buys another company for more than the fair value of its net identifiable assets.

Goodwill=Purchase Price−Fair Value of Net Identifiable Assets

what type of account is accum. deprecation

contra asset

what type of account is amortization expense

expense