9

Question 1

what do you do in a liquidation of P’?

Answer 1

• pay creditors first and partners’ cap. last
• Convert noncash assets to cash and the remaining G/L will go to proportional partners
• cap. deficiencies are possible and partners have a right of offset (to use loan accounts).
• once they are completely dry, the remaining partners must absorb the deficiency in accordance with their P/L ratios

Question 2

what does salary allowance do in P’ acct?

Answer 2

it decreases earnings to be distributed

Question 3

what is the “reporting sufficiency test”?

Answer 3

ext. revenues that is 75%+

* if not met, must get the next segment with highest ext. sales and revenues to get 75%+

Question 4

what do you do with finder’s fees in an operating lease?

Answer 4

you cap. amortize it over the life of the lease

Question 5

what tax rate is used for interim reports?

Answer 5

the CY effective annual tax rate

Question 6

when do subseq. events take place?

Answer 6

AFTER the formal BS date (not after issued)

Question 7

how are discont’d op’s that occur midyear initially reported?

Answer 7

they are included in NI and disclosed in the notes to interim FS’s

Question 8

when are inventory G/L recognized?

Answer 8

only in the 4th quarter/YE of FS’s

Question 9

under current cost acct, how is holding gain calc’d?

Answer 9

replacement cost YE - PP at date

Question 10

how do you get EB of allowance account?

Answer 10

BB + provision for BD (%allow. for NS) + recovery - BD WO +/- adj’s = EB

Question 11

which method of estimating uncoll. acc’s that emphasizes asset valuation?

Answer 11

aging the receivables

Question 12

what is the “WO method”?

Answer 12

it is a method used only by tax and O/S’s collectible amount and results in poor matching of R and E

Question 13

how do you calculate the amount of cash received back from the bank when discounting the note at a bank?

Answer 13

• face of note * interest rate = interest
• add the interest + “P” = maturity value of note
• maturity value of note * discount rate (*date)
• subtract above amount from maturity value of note to get proceeds from bank

Question 14

what is the T-chart for Allowance accounts?

Answer 14

right side: BB, recovery, CY BDE
left side: adjustments, WO’s

= EB

Question 15

what is the T-chart for A/R?

Answer 15

left side: BB, credit sales
right side: WO’s, converted to N/R, cash collection,

= EB

Question 16

what is the JE when a rec. is det’d uncoll’d (WO)?

Answer 16

Dr: allow for DA xx
Cr: A/R xx

*does not affect NI

Question 17

JE for uncoll. acc’s recovery:

Answer 17

Dr: cash xx

Cr: “unc.” xx

Question 18

what is the adjusting JE for allow. on debit side?

Answer 18

Dr: allow. xx

Cr: BDE xx

Question 19

what is the JE for CY BDE?

Answer 19

Dr: BDE xx

Cr: Allow. xx

Question 20

what do you record when pledging A/R?

Answer 20

Treat as loan and footnote only