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Financial Accoutning

SOLUTIONS


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Question 1.

Is the direct or allowance method for returns and bad debts GAAP?
Why?
Allowance.

Describe the difference between perpetual and periodic inventory
systems.
Periodic -- COS are recorded at period end.
Perpetual -- COS are recorded after every sale.

Describe a receipts and disbursements schedule?
A schedule of cash in and out, receipts and disbursements and an
analysis (ending balance) of cash.

What is the purpose of a   receipts and disbursements schedule?
So the corporation manages short and excess cash.

What is the purpose of a petty cash fund?
So cash can be on hand at a business for small expenditures.

What s a NSF check?
A not sufficient funds check, a check written by a customer that
was dishonored.

What are the three parts to a bank reconciliation?
The bank reconciliation, the company reconciliation and Journal
entries for the company reconciliation.

What is the difference between Accounts Receivable and
Notes Receivable?
A/R is open credit with out interest, N/R is credit evidenced
by a note and interest bearing.

What is Cost of Goods Sold?
The cost of goods sold during the period.

What is Gross Margin?
Sales less COGS.

What is the difference in a periodic vs. perpetual inventory system?
In a periodic system COGS entries are made at the end of an
accounting cycle.
In a perpetual system a...