Business Administration 2257 Midterm: Colour coded cheat sheet for 1st Midterm
4 Dec 2013
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Specific identification: value everything at their unique market value price. Fifo: oldest inventory is sold first and e/b is valued at most recent price (if you have a whole order, then you take the full amount owing and half orders you treat like weighted averages) Average cost: (cogafs/uafs [total units available for sale]) x e/b in units. Lcnrv rule: record inventory at lower of cost vs. net realizable value. Straight line and units of production do not depreciate past its useful life. Diminishing balance cannot depreciate beyond its estimated residual value. Once an asset is fully depreciated bv should equal rv. (hc-rv) / total units * units used (double) diminishing/declining balance (for last year of assets life: depreciation = (hc-ad) rv) Income summary (debit) to expenses (essentially revenue expenses) Subtotal income summary and record taxes to income tax expense and income tax payable (revenue expenses * given %) * have to create new income tax expense/income tax payable accounts*
