MGT 103 Accounting Review Flashcards

Vocabulary practice flashcards covering journal entries, multi-step income statements, classified balance sheets, bond valuation, accounts receivable adjustments, dollar-value LIFO, and the conventional retail method.

Supplies Expense Adjustment

The expense recognized for supplies used during an accounting period, calculated using the formula $\text{Beginning Balance} + \text{Purchases} - \text{Ending Balance}$ (e.g., $\$20,000 + \$8,000 - \$17,000 = \$11,000$).

Straight-Line Depreciation Formula

A method of calculating annual depreciation expense using the formula $\frac{\text{Asset Cost} - \text{Residual Value}}{\text{Useful Life}} \times \text{Fraction of Year}$ (e.g., \frac{\$36,000 - \4,000}{8 \text{ years}} \times \frac{3}{12} = \$1,000$).

Accrued Interest Expense Formula

The formula used to calculate accrued interest expense at year-end: $\text{Principal} \times \text{Annual Interest Rate} \times \text{Time Ratio}$ (e.g., \70,000 \times 6\% \times \frac{4}{12} = \$1,400$).

Multiple-Step Income Statement

An income statement format that classifies revenues and expenses into sections, separating gross profit, operating expenses (selling and administrative), non-operating income/expenses, and discontinued operations.

Discontinued Operations

A section of the income statement reported net of income tax effects below income from continuing operations, showing operational results and gains or losses on disposal of a discontinued business segment.

Zarong Corporation Classified Balance Sheet

A classified balance sheet prepared as of December 31, 2026, showing Total Current Assets of $\$153,860$, Property, Plant, & Equipment of $\$252,720$, Total Liabilities of $\$111,900$, and Total Stockholders' Equity of $\$294,680$, balancing at $\$406,580$.

Present Value of a Bond

The sum of the present value of the face value (discounted as a single lump sum using the market rate per period) and the present value of the periodic coupon interest payments (discounted as an ordinary annuity using the market rate per period).

Recovery of Written-Off Account

A two-part entry recorded when a previously written-off account receivable is collected: first, reinstate the account by debiting Accounts Receivable and crediting Allowance for Credit Losses; second, record cash collection by debiting Cash and crediting Accounts Receivable.

Brewing Company Accounts Receivable & Allowance T-Accounts

T-accounts illustrating the impact of reinstatements and write-offs on Accounts Receivable and Allowance for Credit Losses, resulting in unadjusted balances on January 31 of $\$644,600$ debit and $\$31,300$ credit, respectively.

Percentage of Accounts Receivable Method

An estimation method for uncollectible accounts where the desired ending allowance balance is calculated as $\text{Ending Accounts Receivable} \times \text{Estimated Percentage}$, and the adjusting entry equals the desired balance minus the unadjusted balance.

Dollar-Value LIFO Base-Year Inventory

Inventory cost converted to base-year price levels to measure real quantity growth, calculated as $\frac{\text{Inventory at Current Prices}}{\text{Current Price Index}}$.

Conventional Retail Inventory Method

A retail method variation that approximates the lower-of-cost-or-market approach by including net markups but excluding net markdowns in the cost-to-retail percentage computation.