WSU Accounting 230 Exam 2 Review Questions And Accurate Answers

Define Accounts Receivable/Notes Receivable - Correct Answer Accounts Receivable: money owed to a company by its debtors. Notes Receivable: an asset of a company, bank or other organization that holds a written promissory note from another party. Calculate net revenues using discounts, returns, and allowances. - Correct Answer Starting with gross sales, subtract the total sales discounts, returns and allowances you gave your customers to determine your net sales. Be able to journalize the sale and payment of receivables - Correct Answer Explain why accounts receivables are valued at their collectible amount (net realizable value) and explain the % of receivables allowance method. Understand the balance sheet presentation of receivables and how and why they are valued down to their estimated collectible amount. - Correct Answer Calculate and journalize an allowance for future uncollectible accounts using the percentage of receivables. - Correct Answer Be able to journalize the write-off of specific bad accounts and record the recovery of a debt written off (collection of accounts previously written off). - Correct Answer Contrast the allowance method and the direct write-off method when accounting for uncollected accounts. - Correct Answer Apply the procedure to account for notes receivable, including interest calculations and journalize the transactions related to the interest accrual and payment of the note receivable. - Correct Answer Trace the flow of inventory costs from manufacturing companies to merchandising companies. - Correct Answer Understand how the cost of goods sold is calculated. Be able to prepare a multi-step income statement and know the difference between operating and non-operating activities - Correct Answer Non-operating income, in accounting and finance, is gains or losses from sources not related to the typical activities of the business or organization. Non-operating income can include gains or losses from investments, property or asset sales, currency exchange, and other atypical gains or losses. Determine the cost of goods sold and ending inventory using the Fifo method. Explain the financial statement effects and tax effects of each of the inventory cost flow assumptions. Note which cost flow reports the most recent inventory costs in the Income Statement or Balance Sheet. - Correct Answer Record inventory transactions using a perpetual inventory system; know how to record net sales revenue and sales returns and allowances year-end adjustment and the return of inventory from a buyer under the new GAAP guidelines. See related quiz and key. - Correct Answer Determine ownership and who is responsible for the cost of shipping merchandise inventory by the shipping terms. - Correct Answer Distinguish between current and long-term liabilities. - Correct Answer Be able to explain deferred (unearned) revenues and be able to make necessary