Accounting Review for General Accounting and Consolidation Exam
Autor: Giacomo Lapo Ghezzi • February 26, 2016 • Course Note • 1,731 Words (7 Pages) • 970 Views
Remarks for the Accounting General Exam:
CHAPTER 4:
- Unearned Revenue is a liability
- Depreciation è una Deferred Expense
- Accumulated Depreciation è un XA
CHAPTER 6:
- Allowance for Doubtful Accounts is a XA
- Sales returns and allowances is a XR
- Sales discounts is a XR
CHAPTER 9: Notes Payable
- The notes payable at a future date, are registered at their present value.
- The interest is calculated on the book value at the date on which the financial year ends
- Debit Interest Expense (+E, - SE)
- Credit Notes Payable (+L)
- Estimate liabilities:
- Probable:
- Subject to estimate: Recorded as a liability + disclosure note
- Not subject to estimate: Disclosed in Note
- Reasonably possible:
- Subject to estimate: Disclosed in Note
- Not subject to estimate: disclosed in note
- Remote: disclosure is not required
CHAPTER 10: Bonds
Bonds are recorded at their Present Value, see general rule for liabilities in the chapter above
- DISCOUNT BONDS
- Journal entry at issue date
CASH(+A) XXX
BOND DISCOUNT (+XL, -L) X
BONDS PAYABLE (+L) XXXX
Cash + Bond Discount = Bond Payable
- Payment of Interest / Amortization of discount
- STRAIGHT LINE
INTEREST EXP. (+E) XXX
BOND DISCOUNT (-XL, +L) X
CASH (-A) XX
Bond Discount = Total Bond Discount / Y x n
Y= years
n= nº of payments per year
Cash = (N x c)/n
c= stated interest rate
N= Principal
Cash + Bond Discount= Interest Expense
- EFFECTIVE INTEREST AMORTIZATION
INTEREST EXPENSE (+E) XXX
BOND DISCOUNT (-XL, +L) X
CASH (-A) XX
I.E.= U.B. x i/n
U.B. = Unpaid Balance = Book Value @ Present Value – Paid Balance
i= market rate
Cash = (N x c)/n
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