Term
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Definition
| The estimation of uncollectible accounts. |
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Term
| Does the allowance for uncollectible accounts effect gross accounts receivable? |
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Definition
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Term
| Does an increase in uncollectable accounts reduce accounts receivable? |
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Definition
| No, but it does represent an expense on the balance sheet (reducing non-cash assets and retained earnings) |
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Term
| Does a write-off of an uncollectible account impact accounts receivable? |
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Definition
| Yes. Additionally it both reduces and increases non-cash assets (A/R reduction, Allowance Uncollectable Accounts Increase) |
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Term
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Definition
| Borrowing income from future year(s) to show higher income in the current year. |
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Term
| What two problems do allowances introduce? |
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Definition
| Income Shifting and Cookie Jars |
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Term
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Definition
| Using allowances to move income from the current period to future periods. |
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Term
| Who determines how to calculate aging analysis? |
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Definition
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Term
| What is the opposite of a cookie jar? |
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Definition
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Term
| Overestimating bad debt expense can lead to what negative situation? |
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Definition
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Term
| Underestimating bad debt expense can lead to what negative situation |
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Definition
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Term
| How do you calculate accounts receivable turnover? |
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Definition
| Sales / Avg Gross Account Receivable |
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Term
| How do you calculate the average collection period? |
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Definition
| Account Receivable (gross) / Avg Daily Sales |
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Term
| How do you calculate average daily sales? |
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Definition
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Term
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Definition
| A cost recorded on a balance sheet that is not immediately expense. |
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Term
| How do you calculate gross profit? |
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Definition
| Sale - Cost of Goods Sold |
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Term
| What are the two ways to calculate cost of goods available for sale? |
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Definition
1) Beginning Inventory + Inventory acquired
2) Ending Inventory + Cost of Goods Sold |
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Term
| What are the three inventory costing methods? |
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Definition
| FIFO, LIFO, Average Cost (AC) |
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Term
| What is lower cost of market? |
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Definition
| The process of writing down inventory when it's cost is lower than the market (replacement) value |
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Term
| What expense account does writing down inventory due to lower cost of market go towards? |
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Definition
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Term
| Are cost of goods sold shown in Selling, General or Administrative? |
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Definition
| No, again, it shows up under cost of goods sold |
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Term
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Definition
| Process of minimizing inventory without causing problems with holding insufficient inventory |
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Term
| Assuming the same level of sales, which inventory costing method gives you higher gross profit? |
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Definition
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Term
| Assuming the same level of sales, which inventory costing method gives you the highest cost of goods sold? |
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Definition
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Term
| While FIFO has been shown to show minimal impact on gross profit, when might the gross profit effect occur? |
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Definition
| In companies who are subject to high inflation or slow inventory turnover. |
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Term
| Does the inventory costing method effect a company's taxable income? |
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Definition
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Term
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Definition
| The difference between the LIFO costing method and the FIFO costing method |
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Term
| For companies using LIFO, how would you calculate FIFO inventory? |
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Definition
| LIFO Inventory + LIFO Reserve |
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Term
| How do you calculate gross profit margin? |
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Definition
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Term
| How do you calculate inventory turnover? |
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Definition
| Cost of Goods Sold / Avg Inventory |
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Term
| How do you calculate the depreciation base? |
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Definition
| Actual cost of an asset - salvage value. |
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Term
| How do you calculate the depreciation rate under the straight line method? |
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Definition
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Term
| How do you calculate the annual depreciation amount under the straight line method? |
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Definition
| Depreciation Base / Useful Life (yrs) |
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Term
| If an asset cost $15,000 and has a salvage value of 5,000 what would be the initial net book value before you start depreciation? |
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Definition
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Term
| How do you calculate the net book value of an asset? |
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Definition
| Cost - accumulated depreciation |
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Term
| How do you calculate the gain/loss of an asset sold? |
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Definition
| Sale price - Net Book Value |
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Term
| When do you write down or "impair" an asset? |
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Definition
| If the sum of the expected cash flow is less than the net book value of the asset. |
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Term
| If future cash flow from an asset is 1,000 and it's net book value is 1,100 would you write it down? If so, how much? |
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Definition
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Term
| How do you calculate PPE turnover? |
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Definition
| Sales / Avg PPE assets (*net*) |
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Term
| How do you calculate the percent used up an asset is? |
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Definition
| Accumulated Depreciation / Depreciable Asset Cost |
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Term
| What two things do you exclude on total depreciable PPE? |
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Definition
| Land and construction in progress |
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