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Double Jeopardy…

Double Jeopardy… November 27, 2001 Today’s Categories… Financial Statements Inventories Long Term Assets Marketable Securities Revenue Expenses Financ’l Statmts Inven-tories LT Assets Mktble Security Revenue Expenses $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 400 $ 400

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Double Jeopardy…

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  1. Double Jeopardy… November 27, 2001

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

  3. Financ’l Statmts Inven-tories LT Assets Mktble Security Revenue Expenses $200 $200 $200 $200 $200 $200 $400 $400 $400 $400 $400 $400 $600 $600 $600 $600 $600 $600 $800 $800 $800 $800 $800 $800 $1000 $1000 $1000 $1000 $1000 $1000

  4. 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

  5. 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? Back to Board

  6. 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? Back to Board

  7. 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? Back to Board

  8. 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? Back to Board

  9. Inventories $200 These are the four inventory costing methods covered in class. What are LIFO, FIFO, Specific Identity, and Weighted Average? Back to Board

  10. 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? Back to Board

  11. 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? Back to Board

  12. 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? Back to Board

  13. 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? Back to Board

  14. 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? Back to Board

  15. Long Term Assets $400 Assets such as patents, copyrights, franchises, and trademarks. What are “Intangible” assets? Back to Board

  16. Long Term Assets $600 DAILY DOUBLE!!!

  17. Long Term Assets $800 Depletion is the name for a reduction in value of this type of asset. What are Natural Resources? Back to Board

  18. Long Term Assets $1000 A credit to Accumulated Depreciation is accompanied by a debit to this account. What is Depreciation Expense? Back to Board

  19. 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? Back to Board

  20. 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”? Back to Board

  21. Securities $600 The account, “Unrealized Gain on an Available-For-Sale Security” is reported on this financial statement. What is the Balance Sheet? Back to Board

  22. Securities $800 This is the most “common” type of Equity security. What is “Common Stock”? Back to Board

  23. 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”? Back to Board

  24. 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? Back to Board

  25. 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? Back to Board

  26. 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. Back to Board

  27. 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)? Back to Board

  28. 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”? Back to Board

  29. Expenses $200 A prepaid expense is reported on this financial statement until it is used up. What is the Balance Sheet? Back to Board

  30. 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? Back to Board

  31. 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? Back to Board

  32. Expenses $800 DAILY DOUBLE!!!

  33. Expenses $1000 A “product cost” is kept on the Balance Sheet until this event occurs. What is “selling the product”? Back to Board

  34. Daily Double • State Your Wager

  35. 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.

  36. 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. $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. Back to Board

  37. Daily Double • State Your Wager

  38. 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.

  39. 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. What is $53,500? Back to Board

  40. Final Jeopardy… The category is “Bank Reconciliations”

  41. Bank Reconciliations… Write your Wagers…

  42. 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

  43. Answer: • $26,100

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