New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Accy 202 Notes

by: Tarence Notetaker

Accy 202 Notes ACCY 202

Tarence Notetaker

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes are from each chapter labeled in the title.
Introduction to Accounting Principles II
Joshua Simer
Class Notes
Accounting, margineal, 202, Math, business
25 ?




Popular in Introduction to Accounting Principles II

Popular in Department

This 23 page Class Notes was uploaded by Tarence Notetaker on Wednesday October 5, 2016. The Class Notes belongs to ACCY 202 at University of Mississippi taught by Joshua Simer in Fall 2016. Since its upload, it has received 5 views.

Similar to ACCY 202 at OleMiss

Popular in Subject


Reviews for Accy 202 Notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/05/16
Cash Flows  Focus on operating, investing, and financing. o Operating Activities: Day to day activities of an organization that determine net income. (can be a cash inflow or outflow) o Investing Activities: transactions affecting long term assets. (property planning equipment, land, intangibles, long term investments) o Financing Activities: transactions affecting long term liabilities and equity. (notes payable, common stock, retained earnings)  How do we prepare a Statement of Cash flow? o Compute change in cash. (current year cash balance minus prior year cash balance) o Compute/report, net cash provided (used) in operating activities o ‘’ investing o ‘’ financing o Combine the sections and reconcile  Operating Section o 2 methods  Direct method: separately list major items of operating cash receipts and cash payments.  Cash receipts – cash payment = net cash provided (used) in operating activities  Indirect method: reports net income and adjust for items necessary to get to net cash provided (used) in operating activities.  Examples o Makes sales of $1m for cash  Net income went up $1m  Cash went up by $1m o Makes total sales of $1m  $750,000 cash  $750,000 credit to be collected next year  Net income went up by $1m  Cash went up by $750,000  2 types of adjustments o Non cash Revenues and expenses  (depreciation, amortization, depletion)  decreases net income and nothing to cash so add back those expenses  (gain/loss on sale of assets)  gains we subtract and loses we added back  Gains: Sells truck for $10,000 (operating) cash Historical cost $20,000 Accumulated Depreciation $12,000 Cash is debited10,000 (investing) Accumulated Depreciation is debited 12,000 Truck is credited 20,000 Gain on sale is credited for 2,000 (increase net income and does nothing to cash) 2 o Adjust for changes in current assets and current liabilities + - Current Assets - + Current Liabilities + -  3 steps to prepare investing and financing sections o Step 1: Identify the accounts that changed.  (Long-Term assets: Land) o Step 2: Analyze accounts to determine cause of change. o Step 3: Report the cash effect. Quick Study 12-8 pg. 563 Heading Operating Section: Investing Activities: Sale of short term investments (inflow) 6,000 Purchased of used equipment (outflow) (5,000) Net cash provided by investing activities 1,000 Quick Study 12-10 pg. 563 Heading 3 Financing Activities: Short Term Borrowings (inflow) 20,000 Cash dividends paid (outflow) (16,000) Net cash provided by financing activities 4,000 Quick Study 12-5 pg. 562 Sold equipment o Book valued 40,000 o Historical cost 210,000 o Gain on sale 3,000  Cash Effect = Book Valued – Gain on sale Cash 37,000 Accumulated Depreciation 170,000 Loss on Sale 3,000 Equipment 210,000 Book valued = Historical Cost – Accumulated Depreciation Heading Investing Activities: Cash received from sale of equipment 37,000 Quick Study 12-9 pg. 263 Cash Common Stock 4 Paid in Capital C/s: 105,000 – 100,000 = 5,000 P/c: 567,000 – 342,000 = 225,000 230,000 cash effect Operating 72000 Investing 63000 Financing 5000 140000 12-7 pg. 567 Investing cash received from sale equipment 51,300 (book value – sold at loss) cash paid for new truck (89,000) cash received for land 198,000 cash received from stocks 60,800 Net cash provided by investing activities221,100 12-8 pg. 567 Financing proceeds from issuance of c/s 64,000 paid cash dividend (14,600) paid cash for note payable (50,000) paid cash to acquire treasury stock (12,000) Net cash used by financing activities -12,600 5 Chapter 12 Reporting Cash Flows  Different Examples of Statements: o Income Statement: Revenue and Expense o Balance Sheets: Assets = Liabilities + Equity o Statement of Retained Earnings o Statement of Stockholders’ Equity 2015 Net Income $259 Cash Balance $184m (2015) $509m (2014) $184m – $259m = $325m cash decreased 12/15/15 Order Inventory 12/20/15 Sell inventory to customer on credit 1/10/16 Pay for inventory purchased 1/15/16 Received cash from customer  Accrual Basis of Accounting o Revenue and Expenses are recognized when earned expenses matched to associated revenue  Cash Basis of Accounting o Revenue and Expenses are recognized when cash is received or paid.  Cash and Cash Equivalent o Highly liquid but not actually cash: CDs, savings account, bonds, stocks, etc. o Not affected by changes in interest rates. Chapter 13 Analyzing Financial Statements  General Purpose Financial Statements o Income statement o Balance sheet o Statement of cash flows o Statement of stockholders’ equity o Notes to the financial statement  2 groups of users in financial information o Internal users  Employees, Managers, Officers, Internal Auditors o External users  Shareholders, Lenders, Customers  We are Coke o Coke 2015 vs Coke 2014 (intracompany) o Coke vs Pepsi (Competitor) o Coke vs Soft Drink Industry (Industry) o Coke vs “Rule of Thumb” (Guideline)  3 types of Financial Statements o Horizontal Analysis (left to right): compare a company’s financial and item performance. (across time) o Vertical Analysis: compare a company’s financial and item performance. (to a base amount) o Ration Analysis: measurement of key relationships between financial statement items.  Comparative financial Statements o Dollar amount change = prior year amount o Percent change = prior year amount  Trend Percentages = compute trend %’s for a series of financial data. o We need a BASE PERIOD o Trend = Analysis Period Amount Base Period Amount Quick Study 13- 4 pg. 613 Net Sales (2014 as base period) 2015: ($801,810/$453,000) times 100 = 177% 2014: (453,000/453,000) times 100 = 100% Cost of Goods Sold 2015: (392,887/134,088) times 100 = 293% 2014: 100%  Common Size Financial Statements o Compare one financial statement item to another to reveal change in relative importance o Common size % = Analysis Amount x 100 Base Amount o If income statement base = sales o If balance sheet = total assets Exercise 13 – 3 2015 2014 2013 2012 2011 Sales 189% 181% 168% 156% 100% COGS 191% 182% 172% 159% 100% A/R 201% 192% 182% 169% 100% 2 COGS should not increase at a higher rate than sales, and this is bad. A/R should not be increasing either Exercise 13 – 6 Liabilities and Equity 2015 2014 2013 A/P 24.8% 16.9% 13.6% Long Term Notes Payable 18.8% 22.9% 22.1% Common Stock 31.3% 36.7% 43.3% Retained Earnings 25.1% 23.5% 21.0% Total Liabilities and Equi100% 100% 100%  Ratio Analysis o Building Blocks of F/S Analysis  Liquidity and Efficiency  Is the company able to meet its short term obligations and efficiently generate revenue?  Solvency  Is the company generated revenue and meet long term obligation?  Profitability  Is the company able to generate profits in a manner that attracts and retains financing?  Market Prospects  Is the company able to generate positive expectations in the market?  Working Capital: Current Assets – Current Liabilities 3 Chapter 14 Cost  Raw Material Inventory (RM Inv.) o Start here; stuff we’ll use to make our product  Work in Process Inventory (WIP Inv.) o Took raw material inventory and started working on a product that isn’t finished at the end of the period.  Finished Goods Inventory (FG Inv.) o Finished product ready for sale Materials Purchased  Raw Materials  Materials Used  Work in Progress Inventory  (Direct Labor & Factory Overhead Incurred)  Product Completed  Finished Goods Inventory  Product Sold  Cost of Goods Sold  Cost of Goods Sold o Beginning Finished Goods Inventory + Cost of Goods Manufactured = Goods available for sale – end Finished Good Inventory = Cost of Goods Sold o What you buy at the beginning + what you buy or make = what you have available for use or sale – what you use, sell, finish = what you have at the end  Schedule of Cost of Goods Manufactured o Direct material used (Beg RM Inv. + Materials Purchased = Total materials avail for use – end RM Inv. = Direct Material used) o Direct labor used o FOH (Add All: Factory utilities, Factory Rent, Indirect labor, Indirect Materials) = Total manufacturing costs + Beginning work in process inventory = total cost of work in process - End work in process inventory = Cost of good made Quick Study 14 – 7 Beg FG inventory 345,000 + COGM 918,700 Cost of goods avail for sale 1,263,700 - End FG Inv. (283,600) Cost of Goods Sold = 980,100 Quick Study 14 – 11 Beg RM Inv. 6,000 RM purchased 123,500 Total material avail for =se 129,500 - end RM Inv (7500) DM used = 122,000 Quick Study 14-10 DM used 190,500 DL used 63,150 FOH 24,000 2 Total Manufacturing Costs= 277,650 + Beg WIP Inv 157,600 Total cost of WIP = 435,250 - end WIP inv (142,750) COGM = 292,500 loko Exercise 14 – 8 l.-0.ced 3 Chapter 15 Job Order Production System used by companies that individually produce products to meet specific customer needs  Making products that are heterogeneous, customized, separately manufactured o Examples: custom jewelers, homebuilders, shipbuilders  Jobs = specific customer orders  Still talking about o Direct Material, Direct Labor, Factory Over Head o Raw Material Inventory, Work in Process Inventory, Factory Goods Inventory o Cost of Goods Sold Purchased Material  Raw Material Inventory/Direct Material  (Material/Requisition) Work In Process Inventory/Direct Material, Direct Labor, FOH  Factory Goods Inventory/DM,DL,FOH  (Sale/Deliver)  COGS/DM,DL,FOH  Purchase Material for cash RM Inventory xxx Cash xxx  Purchase Material on Credit RM Inventory xxx A/P xxx  Requisitioned for jobs WIP Inventory xxx RM Inventory xxx  Paid Cash Wages WIP Inventory xxx Cash xxx  Incur Factory Payroll (only Accrue payroll) WIP Inventory xxx Fac. Wages payable xxx  4 step process to estimate FOH Cost o set a predetermined overhead rate before the period begins (estimate) (based on observed relationships in the past) We know that FOH cost are usually a 150% of direct labor costs each month  predetermined overhead rate = estimated overhead cost/estimate activity base o Apply Estimated Overhead to Specific Jobs  Use the Predetermined overhead rate and the activity base specific to the job.  POHR times Activity Base  QS 15-11 DM Cost Direct Material Used Job 1 5000 2000 Job 2 7000 2800 Job 3 1500 600 o Record Actual Overhead Costs (throughout the period) o Compare applied overhead to actual overhead and adjust through COGS.  If applied > Actual OH then OH is OVERAPPLIED  If actual > Applied OH then OH is UNDERAPPLIED  If underapplied: COGS xxx FOH xxx  If overapplied: Factory Overhead xxx COGS xxx 2  Factory OH Entries Applied Overhead WIP Inventory xxx Factory Overhead xxx Record Actual OH Costs Indirect Materials: Factory Overhead xxx Raw Material Inv. xxx Indirect Labor Factory Overhead xxx Factory Wages Pay xxx Factory Overhead xxx Accum Depr. xxx Rent Payable xxx Utilities Payable xxx Prepaid Insurance xxx Factory Overhead Actual (always debit) Applied (always credit) QS 15-4 pg 690 Raw Materials Inv. 50,000 Cash 50,000 To purchase RM for cash Factory Overhead 12,000 Raw Materials 12,000 To record use of indirect materials WIP Inv. 32,000 3 RM Inv. 32,000 To record use of direct materials QS 15-5 Factory Overhead 40,000 Factory Wages Payable 40,000 To record direct labor WIP Inv. 140,000 Factory Wages Payable 140,000 To record indirect labor QS 15-7 90% of DL cost x (175,000 – 44,000) .9 x 131,000 = 117,900 WIP Inventory 117,900 Factory Overhead 117,900 QS 15-10 150% x 600,000 = 900,000 applied OH Factory Overhead 950,000 900,000 50,000 (Underapplied) COGS 50,000 Factory overhead 50,000  4 Chap 16 Process Operation Chapter 16 Process Operations  Mass Production of identical products in a continuous flow of steps o Products are homogenous, not customized, standardized.  Examples: golf ball company, auto manufactures  Process Costing o Measures unit costs at the end of a period by combining the “costs per equivalent unit” from each department Raw Material Inventory Purchase Materials Materials Requisitioned Work In Process Inventory Department 1 Direct Materials Used Cost Transferred to the Direct Labor next Department Factory Overhead Applied Work In Process Inventory Department 2 Cost Transferred from prior Cost Transferred to finished Department goods inventory Direct Material Used Direct Labor Used Factory Overhead Applied Finished Goods Cost transferred from prior Units Sold department  Cost incurred divided by units produced = cost/unis  Equivalent units of production o The number of units that could have been started and completed during a period given the amount of money spent Wilson worked on 100,000 tennis balls this month o 40,000 was completed and transferred to finished goods o 40,000 are 75% complete o 20,000 are 25% complete 40,000 x 100% = 40,000 40,000 x 75% = 30,000 20,000 x 25% = 5,000 75,000 equivalent unit of production  DM, DL, FOH, enter production process at different rates  Separately calculate EUP for: o EUP with respect to DM o EUP with respect to conversion  4 Step Process DON’T SKIP STEPS! 1. Determine the physical flow of units a. Reconcile physical units started with physical units completed 2. Calculate the Equivalent Units of Production (EUP) a. EUP: Equivalent Unit Completion and Transferred + Equivalent Units in Ending WIP Inv. EUP 2 3. Calculate Cost per EUP (Cost/EUP) a. Costs of Beginning WIP INV + Cost incurred in current period Total Costs / EUP Cost/EUP 4. Assign and reconcile costs a. (use EUP and Cost/EUP) b. we need amounts to report as WIP Inv. FG Inv. and COGS. c. Cost of units completed and transferred d. Cost of units I Ending WIP Inv. e. Units to Account For: Units Accounted for: Units in Beginning WIP Inv. Units Completed and +Units Started during Transferred current period +Units in Ending WIP Inv. Total Units to account for Total units Accounted for Must Equal The units worked on during What happened to the units the period came from: worked on during the period? 1. Units started last period 1. Finished the units and not finished 2. Didn’t finish the units Study 16-4 pg. 737 (Never use percentage completion for beginning WIP Inventory) Units to Account for Units Accounted for Units to Beg with 150,000 Units Completed & 3 Units started during current Transferred 340,000 period 310,000 Units in End 120,000 Total Units to Account for: Total Units Accounted for: 460,000 460,000 Quick Study 16-10 pg. 738 Calculating EUP: To Account for Accted For 2,000 9,000 10,000 3,000 12,000 12,000 Materials Conversio n Equivalent Unit Completion and 9,000 9,000 Transferred Equivalent Units in Ending WIP Inv. Materials (3,000 x 80%) 2,400 Conversion (3,000 x 30%) 9,900 EUP 11,400 9,900 EUP with respect to materials is 11,400 EUP and EUP respect to conversion is 9,900EUP Equivalent Unit Completion and Transferred + Equivalent Units in Ending WIP Inv. EUP Quick Study 16-11 pg. 739 Calculating Cost: Material Conversion Cost of Beg WIP 996 585 Inv. Cost incurred this 10404 12285 period 4 Total Costs 11400 12870 /EUP /11400 /9900 Cost/EUP $1/EUP $1.30/EUP Quick Study 16-12 pg. 739 Cost of units comp. trans. DM (9,000 x $1.00) $9,000 Conv (9,000 x $1,30) $11,700 Cost assigned to unit comp. trans $20,700 Cost of units in ending WIP DM (2400 x $1.00) 2400 Conv (900 x $1.30) 1170 3570 total units arranged 24270 Exercise 16-6 pg. 741 Units to account for Unit accounted for Beg WIP Inv. 25,000 Units comp and trans Units started during period 295,000 30,000 Units in ending WIP Inv. 30,000 Total units to account for Total units acct. for 325,000 325,000 Direct Material Conversion Units Completed 295,000 295,000 5 and Transferred Units in Ending WIP Inv. Materials (30,000 24,000 x 80%) Conversion 9,000 (30,000 x 30%) Total EUP 319,000 304,000 Material Conversion Cost Beg. WIP Inv. $44,800 $15,300 Cost incurred this $1,231,200 $896,700 period Total costs $1,276,000 $912,000 /EUP = cost per EUP $4 per EUP $3 per EUP Cost of units completed and transferred DM (295,000 x $4) 1,180,000 Conv. (295,000 x $3) 885,000 Total cost of units completed and transferred 2,065,000 Cost of units in ending WIP DM (24,000 x $4) 96,000 Conv. (9,000 x $3) 27,000 Total Cost of units in ending WIP Inv. 123,000 Total Cost Assigned 2,188,000 To Reconcile: 60,100 1,231,200 6 +896,700 2,188,000 7


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.