1) Operations

2) Financing

3) Selling assets other then products

1) Operations

2) Reduce debt

3) Money paid to owners

4) Purchase of assets (other then inventory)

Petty cash, deposits, cash on hand.

What isn't cash is cheques, visa receipts, etc.

Balance

1) - outstanding cheques

2) + deposits in transit

3) +/- bank errors

Balance

1) - bank service charges

2) + interest earned

3) +/- recording errors

4) - NSF cheques returned (non-sufficient funds)

5) - preauthorized amounts removed

Drawing a fund means debiting Petty Cash and crediting Cash

Replenishing a fund means debiting expenses attached with how the money was spent and crediting cash in order to replenish the value of the petty cash to the normal amount

1) Direct write off method (violates the matching principle since it can be recorded in different accounting periods)

2) Allowance method (preferred, uses estimates)

Debit to Bad Debt Expense and credit to Allowance for Uncollectable Amounts

At the end of the period the bad debt expense will be closed to Retained earnings.

I = Prt

I = Interest, P = Prinicipal, R = Rate, T = Time

Principle includes the base amount plus any interest you already owe from previous periods.

FV = PV(1+r)^n

PV = FV/ (1+r)^n or PV = FV(1+r)^-n

Net Present Value is the value at the present time used to make judgements about future value, based on time value of money

Compounding period is the period where interest is calculated, at the end the interest is paid or added to the principal amount.

Annuity - A series of equal cash flows made in equal period times all either at the beginning or end of the period

Ordinary Annuity - Same as annuity but payments don't occur until the end of the period.

Annuity Due - Annuity that is paid in advance at the beginning of the period such as rent.

Used for annuity. Benefits include clarifying, 

1) how many cash flows

2) the start and end period of cash flows

P_A = {1-(1+r)^-n}/r

*Know the tables well, if a present value is given then use the present value table and divide by the factor

1) For retailers and wholesale business it is merchandise inventory

2) For manufacturing concern it is called finished goods and inventory, they also include raw materials inventory and work in progress inventory

1) Specific Identification

2) Weighted average

3) First-in, first-out (FIFO)

4) Last-in, first out (LIFO)

FIFO uses old prices on IS and current prices on BS.

LIFO uses current prices on IS and old prices on BS.

Weighted Average is in the middle.

1) Know when you are out-of stock

2) Taking stocks is tedious with periodic

3) Accuracy

4) Identifies theft

Historical cost is changed.

It is recorded as a debit to loss in inventory value and a credit to inventory (or debit to COGs, in some cases) *Only done when the market value is stated.

1) Identify the expenditures that make up the cost

2) Expensing any maintenance and adding any extensions to life to the asset

3) Depreciating

4) Test for impairment (carrying amount > fair value)

5) Recognize gains or losses

1) Property, Plant and Equipment

2) Intangible assets

3) Capital Assets held for resale

1) Patents, Trademarks, Copyrights, Franchises, Leases

2) Goodwill (When acquiring a company, the cost of fair value of its net assets transferred over)

3) Deferred charges (Long-term prepaids)

4) Research and Development (Usually not recorded)

1) The sum of the asset - discounts

2) Transportation, installation, testing costs

3) Rights, such as exploring minerals;mineral rights

4) Lawyer and registration fees

1) Basket Purchases - A bunch of assets bought together recognized at fair value

2) Exploration costs - Successful exploration or full-costing methods

3) Self-constructed - record all labour, material and overhead costs

1) Straight line

2) Units of activity (Dep. Amount/Useful life in units)

3) Depletion (Dep. Amount/Estimated reserves)

4) Declining balance or Double Declining-

(book value x 1/# of periods = Dep Expense, book value of next period = book value - dep expense)

Double Declining is (1/#of periods x 2)

(Residual Value is ignored)

Disposition is either when it is sold or destroyed.

You'd debit cash, debit acc. dep., credit the equipment and debit or credit gain or loss.

Regarded as potential future obligations.

Not knowing whether something will become a liability, not knowing how large, not knowing the outcome of a lawsuit.

Only record when it is unfavorable that you will win and the amount can be estimated, is significant. Always include signification contingencies in footnotes.

1) Has more details, clearly states the stated/coupon/nominal rate.

2) A trustee (trust company) is named to represent bondholders 

3) An agent (trust company) act as registrar for principal and interest payments

Coupon Bonds - Coupons attached that promises to pay interest, when pay date comes the coupon is cut off.

Debenture Bonds - No special collateral, special provisions for bondholders that limit dividends being declared

Convertible Bonds - Debentures that a holder can exchange possibly after a time period for some shares