ACC 131 Seipp 2nd Exam Study Guide
ACC 131 Seipp 2nd Exam Study Guide ACC 131
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This 5 page Study Guide was uploaded by Daniel Hemenway on Saturday October 3, 2015. The Study Guide belongs to ACC 131 at Illinois State University taught by Edward Seipp in Summer 2015. Since its upload, it has received 114 views. For similar materials see Financial Accounting in Accounting at Illinois State University.
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Date Created: 10/03/15
Accounting 131002 Exam 2 Study Chapters 45 Please note that the exam may include some or all of the following topics Although this study covers the majority of the exam it may not be all inclusive Chapter 4 19 conceptual multiple choice and 1 multiple choice problems Debit memos might result if the bank makes a prearranged deduction from the business s account to pay a bill Credit memos could result if the bank collected a note receivable for the business Outstanding checks a check issued and recorded by the business that has not been cashed by the recipient of the check Deposits in transit an amount received and recorded by the business but which has not been recorded by the bank in time to appear on the current bank statement NSF Checks a check that has been returned to the depositor because funds in the issuer s account are not sufficient to pay the check bounced check Delaying paying suppliers so a company can earn as much interest on their cash as possible but keeping good relationships with them Speeding up collection from customers in order to invest the cash sooner Earning the greatest return on any excess cash Deposit in transit outstanding checks bank errors service charge NSF checks NSF check charges check errors To begin the reconciliation start with the cash balance from the bank statement and the cash balance from company records For the Bank statement Less Outstanding checks add Deposits in transit add or subtract Bank Errors For the Company statement less service charge less NSF checks less NSF check charges add or subtract check errors The petty cash fund is overseen by a petty cash custodian who both pays for small dollar amounts directly from the fund and reimburses employees who have receipts for items they ve bought with their own money Responsibility is with management An account that records the discrepancies between deposited amounts of actual cash received and the total of the cash register tape Keeps track of daily cash receipts sales and what s in the cash drawer Cash 9970 Cash Over and Short 30 Sales 10000 Chapter 5 12 conceptual multiple choice 8 multiple choice problems Seller who expects payment in 30 days and offers a 2 discount if payment is made within 10 days would have the notation 210 n30 which is read 210 net30quot Sales Discount A price reduction usually expressed as a percentage of the selling price that companies may offer to encourage prompt payment Trade Discount Reduction in selling price to a certain class of customers Sales Returns Sending back items received that were defective or were the wrong items Sales Allowance A price reduction offered by the seller to induce the buyer to keep the goods when the goods are only slightly defective are shipped late or in some other way are rendered less valuable Net sales revenue Sales revenue Sales returns and allowances A note is a legal document given by a borrower to a lender stating the timing of repayment and the amount principal andor interest to be repaid Accounts do not have a formal note Contra Asset Direct Writeoff Method waits until an account is deemed uncollectible before reducing accounts receivable and recording the bad debt expense Percentage of Sales Method Using past experience a company estimates the percentage of the current period s credit sales that will eventually become uncollectible Aging Method Percentage of Receivables Methodf bad debt expense is estimated by determining the collectability of the accounts receivable rather than by taking a percentage of total credit sales Income Statement Percentage of Sales Method Balance Sheer Approach Aging Method of Sales Method Net Credit Sales x Percentage of Credit Sales Estimated to Default Estimated Bad Debt Expense Aging Method The ending balance in the Bad Debt Expense debit balance The desired ending credit balance Bad Debt Expense They bring the allowance s balance down A written agreement to pay principal and interest on the note maturity date Has date of note maturity date and interest rate For the lender the debit is to notes receivable and the credit is to cash For the borrower the debit is cash and the credit is notes payable Interest Principal x Interest Rate x Time Time is the number of months in the acct period divided by 12 Accounts Receivable Turnover Net Sales Average Net Accounts Receivable
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