Accounting Chapter 8

Chapter 8

• Extending Credit: Advantages and disadvantages of extending credit are discussed.
• Journal Entry for One-Year Loan: The journal entry for a company lending money to a customer repayable within a year is detailed.
• Accounts Receivable vs. Notes Receivable: Similarities between accounts receivable and notes receivable are outlined.
• Bad Debt Expense: The journal entry for recording bad debt expense (debit to Bad Debt Expense, credit to Allowance for Doubtful Accounts) is explained.
• Matching Principle: The purpose of the matching principle in relation to bad debt expense is clarified.
• Permanent vs. Temporary Accounts: Bad Debt Expense's classification as a permanent or temporary account and the difference between these two are discussed.
• Writing Off a Customer Account: The journal entry for writing off a specific customer account (debit to Allowance for Doubtful Accounts, credit to Accounts Receivable) is detailed.
• Estimating Bad Debts: Two methods for estimating bad debts (percentage of sales and allowance method) are compared, focusing on ease of use and accuracy.
• Percentage of Credit Sales Method: Calculations of bad debt expense using the percentage of credit sales method are explained using examples.
• Allowance for Doubtful Accounts: Calculating the ending balance of Allowance for Doubtful Accounts using the percentage of credit sales method is outlined with examples.
• Aging of Accounts Receivable Method: Bad Debt Expense calculation using the aging of accounts receivable method is detailed, with examples.
• Adjusting Journal Entry for Interest Receivable: The adjusting journal entry needed at year-end to record interest receivable is explained, emphasizing the lack of cash exchange. (Debit Interest Receivable, Credit Interest Revenue; Principal x Rate x Time)

Chapter 9

• Long-Lived Assets: Examples of long-lived assets are provided.
• Fixed Assets: Discussion about the reporting of fixed assets on the balance sheet.
• Intangible Assets: Explanation of intangible assets.
• Capitalizing a Cost: The accounting practice of capitalizing a cost is defined.
• Allocating Purchase Price of Tangible Assets: Methods for allocating the price of a bundled purchase of tangible assets are explained.
• Capitalized Costs: Types of costs that get capitalized into the asset's value during an asset purchase are listed.
• Freight Costs: Freight costs treatment (capitalization vs. expense) is explained.
• Ordinary Repairs and Maintenance: Treatment (capitalization vs. expense) of ordinary repairs and maintenance costs.
• Depreciation: Purpose of depreciating long-lived assets.
• Accumulated Depreciation: Definition of accumulated depreciation is given.
• Straight-Line Depreciation Expense: Calculation of straight-line depreciation expense using examples.
• Gain or Loss on Sale of Asset: Calculation of gain or loss on the sale of tangible depreciable asset via example.

Chapter 10

• Current Liabilities: Definition of current liabilities.
• Payroll Expense: Calculation of total payroll expense using provided information.
• Accounts Payable: Calculation of the ending balance of accounts payable, using provided information.
• FICA Taxes: Responsibility for paying FICA taxes (employee, employer, or both).
• Promissory Note: Journal entry for recording borrowing money via a promissory note (Debit Cash, Credit Note Payable.)
• Interest Payable: Adjusting journal entry for recording interest payable (no cash exchange, debit Interest Expense, credit Interest Payable; principal x rate x time).

Chapter 11

• Corporate Formation: Advantages and disadvantages of corporate formation are presented.
• Preemptive Rights: Definition of preemptive rights.
• Debt Financing: Advantages and disadvantages of debt financing.
• Treasury Shares/Outstanding Shares: Calculation of treasury shares and outstanding shares using examples.
• Par Value of Stock: Explanation of the meaning of the par value of stock.
• Stock Triangle: Review of the common stock triangle diagram as discussed in the PowerPoint presentation.
• IPO (Initial Public Offering): Definition of an IPO.
• Sale of Stock (at an amount greater than par): Journal entry for the sale of stock at a price exceeding par value (Debit Cash, Credit Common Stock, Credit APIC).
• Repurchasing Stock (Treasury Stock): Reasons why a company may want to repurchase its stock (treasury stock).
• Dividend Declaration: Journal entry required for recording the declaration of a dividend (Debit Dividends, Credit Dividends Payable). Calculation of Earnings per Share (EPS).

General

• Exam Structure: Details about the exam format: 50 multiple-choice questions (worth 2 points each).
• Study Resources: Additional study materials including "At-Home Review" questions in Canvas and "Extra Solved Problems" PowerPoint presentations in each chapter module are recommended.

This quiz covers essential concepts from Accounting Chapter 8, focusing on credit extension, journal entries for loans, and the intricacies of accounts receivable versus notes receivable. It also discusses bad debt expenses, the matching principle, and classification of accounts, among other critical topics. Test your knowledge on these key accounting principles and practices.