exam two - accounting

nontrade receivable

arises from transactions other than the normal sale or merchandise or services

trade receivable

created by a credit sale on open account

current receivable

due to be paid within one year

noncurrent receiveable

long term in nature

adjusting entry for bad debt expense

bad debt expense xx

allowance for doubtful acc (XA) xx

journal entry for customer write off

allowance for doubtful acc xx

acc receivable xx

specific identification inventory

tracking for expensive unique items

when prices are rising over time, which inventory method reports the highest prices?

FIFO, because the lower cost (old) inventories

perpetual inventory system

update inventory numbers with each sale, we create two journal entries

cash. xx

sales revenue xx

cost of goods sold xx

inventory xx

periodic inventory system

used by smaller companies, only record a sales journal entry w each sale

determine COGS once @ end of period

cash. xx

sales revenue xx

COGS equation

beg bal + purchases - end bal

declining cost

highest net income

highest inventory

LIFO

rising cost

highest net income

highest inventory

FIFO

assets

economic resource (owned by the company) that are expected to provide future benefits to the company

recorded on balance sheet

expenses

resources that the company used to earn revenues during the period

increases future benefit

recorded on the income statement

capitialized

when we record a particular amount as a part of the cost of an asset (instead of an expense)

brings future benefit

book value

remaining value that is not yet depreciated

c