Double Jeopardy…

November 27, 2001

Today’s Categories… Financial Statements Inventories Long Term Assets Marketable Securities Revenue Expenses

Financ’l Statmts

Mktble Security

Revenue

Expenses

$200 $200 $200 $200

$400 $400 $400 $400

$600 $600 $600 $600

$800 $800 $800 $800

$1000

LT Assets

$800

$200

$400

$600

$1000

Inven-tories

$200

$400

$600

$800

$1000 $1000 $1000 $1000

Financial Statements $200

A subtotal found on the Income Statement, -- composed of “Revenues” less “Cost of Goods Sold”.

What is Gross Margin?

Back to Board

Financial Statements $400

A type of Balance Sheet which separates assets into Current Assets and Long-Term Assets, and separates liabilities into Current Liabilities and Long-Term Liabilities.

What is a Classified Balance Sheet?

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Financial Statements $600

This is the technical name for the value of depreciated equipment. It is a subtotal found on the Balance Sheet -- composed of “Equipment” less its “Accumulated Depreciation”.

What is the Equipment: Net Book Value?

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Financial Statements $800

This statement consists of three sections:

(1) Operation Activities, (2) Financing Actvities, and (3) Investing Activities.

What is the Statement of Cash Flows?

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Financial Statements $1000

An Income Statement where each figure is reported as a percentage of Net Sales instead of the actual dollar figures.

What is a “Common-Size” statement?

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Inventories $200

These are the four inventory costing methods covered in class.

What are LIFO, FIFO, Specific Identity, and Weighted Average?

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Inventories $400

A company is using this type of inventory recording system, if it credits the inventory account at the time each merchandise sale is made.

What is the perpetual inventory system?

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Inventories $600

When you purchase inventory FOB Shipping Point, you will probably make a debit entry to this account to record the freight charges -- assuming you pay cash to the freight company.

What is the inventory account?

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Inventories $800

In an inflationary economy, this inventory costing system will result in a higher cost of goods sold (and lower net income) than most other costing systems.

What is LIFO?

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Inventories $1000

When a company takes a physical inventory count and discovers that some inventory is missing, the company makes this journal entry to bring its books in line with reality.

What is a debit to expense and a credit to inventory?

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Long Term Assets $200

This is the name for the value which the company estimates a piece of equipment will be worth at the end of its useful life.

What is the “Salvage Value” of a long-term asset?

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Long Term Assets $400

Assets such as patents, copyrights, franchises, and trademarks.

What are “Intangible” assets?

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Long Term Assets $600

DAILY DOUBLE!!!

Long Term Assets $800

Depletion is the name for a reduction in value of this type of asset.

What are Natural Resources?

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Long Term Assets $1000

A credit to Accumulated Depreciation is accompanied by a debit to this account.

What is Depreciation Expense?

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Securities $200

The “amount of increase” in market price of a Trading Security during a period is reported on this statement.

What is the Income Statement?

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Securities $400

Always a debt security, this is the only class of marketable security which is not valued on the Balance Sheet at market price.

What is a “Hold-to-Maturity Security”?

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Securities $600

The account, “Unrealized Gain on an Available-For-Sale Security” is reported on this financial statement.

What is the Balance Sheet?

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Securities $800

This is the most “common” type of Equity security.

What is “Common Stock”?

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Securities $1000

When a company is holding a marketable equity security, and the investee pays a dividend, the holder of the security records a debit to cash and a credit to this account.

What is “Dividend Income”?

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Revenue $200

This journal entry is made by a company when it sells services on credit.

What is a debit to Accounts Receivable and a credit to Sales Revenue?

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Revenue $400

This is the name of the concept which says that a transaction must be recorded at the time the transaction takes place, even if the actual cash hasn’t yet changed hands.

What is Accrual Accounting?

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Revenue $600

This is the journal entry made by a company -- using the direct write-off method of accounting for bad debts -- when a receivable really becomes uncollectible.

What is a credit to Accounts Receivable and a debit to Bad Debt Expense.

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Revenue $800

These are some examples of “income” which a company can earn, but which are NOT considered normal sales revenue. These appear on the Income Statement in a section following the “Income from Operations” line.

What are Gains (or Interest Income)?

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Revenue $1000

When a customer pays your company in advance for work to be performed later, this is the account which holds the deferral.

What is “Unearned Revenue”?

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Expenses $200

A prepaid expense is reported on this financial statement until it is used up.

What is the Balance Sheet?

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Expenses $400

A debit to an expense account is often accompanied by a credit (for the same amount) which reduces this class of account.

What is an Asset Account?

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Expenses $600

The reduction in value of an intangible asset is known as this type of expense.

What is the Amortization of an Intangible Asset?

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Expenses $800

DAILY DOUBLE!!!

Expenses $1000

A “product cost” is kept on the Balance Sheet until this event occurs.

What is “selling the product”?

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Daily Double State Your Wager

Long Term Assets ---

Say you purchase a piece of equipment for $100,000, and expect its salvage value to be $20,000 at the end of eight years; this figure is the asset’s Net Book Value at the end of the third year.

Long Term Assets ---

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Say you purchase a piece of equipment for $100,000, and expect its salvage value to be $20,000 at the end of eight years; this figure is the asset’s Net Book Value at the end of the third year.

$100,000 less $20,000 means the depreciable amount $80,000. --- Spread across eight years, depreciation expense is $10,000/year. --- At the end of three years, accumulated depreciation is $30,000. --- Net Book Value is $100,000 - $30,000, or $70,000.

Daily Double State Your Wager

Expenses ---

Say your company obtains a loan from the bank. The loan principal is $50,000, the loan term is three years, and the interest rate is 7%. Interest is payable at the maturity of the loan. The Balance Sheet will show this amount as the total loan liability at the end of the loan’s first year.

Expenses ---

What is $53,500?

Back to Board

Say your company obtains a loan from the bank. The loan principal is $50,000, the loan term is three years, and the interest rate is 7%. Interest is payable at the maturity of the loan. The Balance Sheet will show this amount as the total loan liability at the end of the loan’s first year.

Final Jeopardy…

The category is “Bank Reconciliations”

Bank Reconciliations…

Write your Wagers…

Bank Reconciliations Book Balance = $26,200 Bank Statement Ending Balance = $24,300 Bank Fees shown on statement = $200 Interest Earned shown on statement = $100 Outstanding Checks = $9,200 Deposits in Transit = $11,000 No NSF items this month…

Given the above information, THIS FIGURE is the Actual Cash Balance

Answer: $26,100