UNISEMINAR

Accounting

Maastricht 2nd  Edition Academic  Year  12/13

Table  of  Contents

Accounting

Uniseminar

Accounting

Chapter  01:  [FA]  Financial  Statements 012  –  041 Chapter  02:  [FA]  Transaction  Analysis 042  –  069

Chapter  03:  [FA]  Accrual  Accounting 070  –  099 Chapter  04:  [MA]  Accounting  and  Costs 100  –  154

Chapter  05:  [MA]  Job  Costing   155  –  178 Chapter  06:  [MA]  Process  Costing 179  –  194

Chapter  07:  [MA]  Cost  Allocation 195  –  211 Chapter  08:  [MA]  Activity  Based  Costing 212  –  231

Chapter  09:  [MA]  Absorption  versus  Variable  Costing   232  –  248 Chapter  10:  [MA]  Cost  Behavior 249  –  271

Chapter  11:  [MA]  Cost-­‐Volume-­‐Pro�it  Analysis 272  –  295

Chapter  12:  [MA]  Relevant  Information  and  Decision  Making 296  –  321 Chapter  13:  [MA]  Preparing  Budgets  and  Variance  Analysis 322  –  367

Table  of  Contents

Learning  Card  Types Part  1

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In  order  to  prepare  you  as  good  as  possible  for  your  exam,  we  tried  to  integrate  various  question  types.

The  cards  can  be  categorized  according  to  the  following  “types“:

  De�initions   Concepts   Formulas   Calculations   Multiple  Choice  Questions   True/False  Questions

Accounting Card  Types

Learning  Card  Types Part  2

Accounting

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Accounting Card  Types

In  order  to  make  the  different  types  clear,  we  have  included  the  following  recognition  features  for  you:

Examples  are  printed  in  italic.

  NNuummeerraattiioonnss  are  illustrated  by  bullet  points.

Continuative  thoughts  are  marked  by  an  à.

DDee��iinniittiioonnss  are  framed  and  grey.

Formulas  are  framed.

Accounting

Sample  Front

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On  the  front  of  a  learning  card  you  will  �ind  the  following:

  In  the  header:  the  course  title,  the  corresponding  chapter  as  well  as  the  topic

  The  question  as  well  as  an  information  about  the  card  type

  In  the  footer  on  the  left:  the  dif�iculty  of  the  question:

  In  the  footer  on  the  right:   the  number  of   the  current  card  as  well  as  the  total  number  of  cards.

easy medium hard

Accounting Sample  Front

Sample  Back  

Accounting

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Sample  Back

Accounting

On  the  back  of  a  learning  card,  you  will  �ind  the  following:

  In  the  header  (middle):  the  topic  as  well  as  the  question  in  short

  In   the  header   (right):   the   corresponding  page,  where   to   �ind   the   topic   in   the  UUnniisseemmiinnaarr    TThheeoorryy    SSccrriipptt    ffoorr    AAccccoouunnttiinngg

  In   the   footer   (left):   if   available,   the   corresponding   chapter   in   the  Accounting  textbook  of  the  course

  The  correct  answer(s)  to  the  question  on  the  front

Accounting Chapter  01:  Financial  Statements

Since  we  live  in  a  global  economy,  all  countries  have  adopted  the  same  accounting  standards  

for  business  transactions.

-­‐  True/False  -­‐

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Same  Accounting  Standards?

Harrison  et  al.  (FA),  chapter  1  

Accounting  Standards

FFaallssee.. Even  though  businesses  becomes  more  global,  many  countries  have  their  own  accounting  standards.  IFRS  is  a  solution  to  overcome  fragmented  accounting  standards,  but  it  is  not  yet  adopted  by  every  country.

Accounting Chapter  01:  Financial  Statements

List  seven  users  of  accounting  information.

-­‐  7  Points  -­‐

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  Investors   Employees   Creditors   Suppliers  and  trade  creditors   Customers   Government  and  its  agencies

List  seven  users  of  accounting  information.

Harrison  et  al.  (FA),  chapter  1  

Conceptual  Framework  of  Accounting

Accounting

At  the  end  of  the  accounting  period,  account  balances  were  as  follows:  cash  $180,000,  

accounts  receivable  $75,000,  common  stock  $20,000,  retained  earnings  $65,000.  Liabilities  

for  the  period  were  $  210,000.

-­‐  True/False  -­‐

Chapter  01:  Financial  Statements

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Application  of  Accounting  Equation

Harrison  et  al.  (FA),  chapter  1  

FFaallssee.. Use  the  accounting  equation  and  solve  for  liabilities: $180,000  +  $75,000  -­‐  $20,000  -­‐  $65,000  =  $170,000

Accounting  Equations P.  7

Accounting

The  normal  balance  of  an  expense  account  is  a  __________  because  expenses  decrease  __________. a)  debit,  assets b)  debit,  expenses c)  debit,  shareholders’  equity d)  credit,  shareholders’  equity

-­‐  Multiple  Choice  -­‐

Chapter  02:  Transaction  Analysis

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Expense  Accounts

Harrison  et  al.  (FA),  chapter  2  

Recording  Transactions

CCoorrrreecctt    aannsswweerr::    CC The  normal  balance  of  an  expense  account  is  a  debit  because  expenses  decrease  shareholders’  equity.  

Accounting Chapter  02:  Transaction  Analysis

What  is  a  journal?

-­‐  De�inition  -­‐

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A  jjoouurrnnaall  is  the  chronological  accounting  record  of  an  entitiy‘s  transactions.

De�inition  journal

Harrison  et  al.  (FA),  chapter  2  

Recording  Transactions P.  13

Accounting Chapter  03:  Accrual  Accounting

State  the  formula  for  the  current  ratio.

-­‐  Formula  -­‐

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Formula  Current  Ratio

Harrison  et  al.  (FA),  chapter  3

   Current  Ratio   =   Total  Current  Assets  

   Total  Current  Liabilities  

Preparing  Financial  Statements

Accounting

List  three  different  types  of  inventories  in  manufacturing  companies.

-­‐  3  Points  -­‐

Chapter  04:  Accounting  and  Costs

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  Direct  materials     Work-­‐in-­‐progress   Finished  goods

Different  types  of  inventories  in  manuf.  companies

Bhimani  et  al.  (MA),  chapter  2

Manufacturing-­‐Sector  Companies P.  25

Accounting

The  following  information  was  gathered  for  Rogers  Company  for  the  year  ended  December  31,  20X5. Assume  that  direct  labor-­‐hours  are  the  cost-­‐allocation  base.  

Compute  the  budgeted  factory  overhead  rate.

-­‐  Calculation  -­‐

Chapter  05:  Job-­‐Costing

                                                                                Budgeted   Actual      Direct  labor-­‐hours       75,000   77,500    Factory  overhead   $525,000   $558,000    

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Budgeted  Factory  Overhead  Rate

Bhimani  et  al.  (MA),  chapter  3

Job-­‐Costing  Using  Normal  Costing

CCoorrrreecctt    aannsswweerr::    $$77..0000    ppeerr    hhoouurr Apply  the  formula  for  budgeted  indirect  rate:   $525,000/75,000  hrs.  =  $7.00  per  hour

P.  31

Accounting Chapter  07:  Cost  Allocation

Give  a  brief  de�inition  of  the  direct  method.

-­‐  De�inition  -­‐

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The  ddiirreecctt    mmeetthhoodd  allocates  support  department  costs  to  operating  departments  only.

De�inition  Direct  Method

Bhimani  et  al.  (MA),  chapter  5

Direct  Method P.  43

Accounting Chapter  11:  Cost–Volume–Pro�it  Analysis

Which  formula  determines  the  operating  leverage?

-­‐  Formula  -­‐

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Formula  Operating  Leverage?

Bhimani  et  al.  (MA),  chapter  8

DDeeggrreeee    ooff    ��OOppeerraattiinngg    LLeevveerraaggee =

Contribution  Margin

Net  Operating  Pro�it

Cost  Planning  and  CVP

Accounting

Name  two  essential  differences  when  pricing  for  the  long  run  relative  to  the  

short  run.

-­‐  2  Points  -­‐

Chapter  12:    Relevant  Information  and  Decision  Making

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  Costs  that  are  often  irrelevant  for  short-­‐run  pricing  decisions  (�ixed  costs)  are  often  relevant  in  the  long  run.   Pro�it  margins  in  long-­‐run  pricing  decisions  are  often  set  to  earn  a  reasonable  return  on  investment.

Two  differences  when  pricing  for  the  long  run/short  run

Bhimani  et  al.  (MA),  chapter  12

One-­‐Off  Special  Orders P.  111

Accounting Chapter  12:    Relevant  Information  and  Decision  Making

Recap:  What  is  the  decision  rule  for  special  orders?

-­‐  Concept  -­‐

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Decision  Rule  for  Special  Orders

Bhimani  et  al.  (MA),  chapter  10

DDeecciissiioonn    rruullee::    Accept  the  order  if  the  differential  revenue  is  greater  than  the  differential  cost.

One-­‐Off  Special  Orders P.  101

Accounting

Bates  Inc.  used  the  following  data  to  evaluate  their  current  operating  system.  The  company  sells  items  for  $10  each  and  used  a  budgeted  selling  price  of  $10  per  unit. What  is  the  static-­‐budget  variance  for  variable  costs?

�-­‐  Calculation  -­‐

Chapter  13:  Preparing  Budgets  and  Variance  Analysis

Actual   Budgeted  Units  sold   495,000   500,000  Variable  costs   $1,250,000   $1,500,000  Fixed  costs   $  925,000   $  900,000  

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Calculation  static-­‐budget  variance  of  revenues

CCoorrrreecctt    aannsswweerr::    $$225500,,000000    FF Use  the  formula  for  the  static  budget  variance. $1,250,000  -­‐  $1,500,000=  $250,000  F

Static  Budgets  and  Flexible  Budgets P.  118

Accounting Chapter  13:  Preparing  Budgets  and  Variance  Analysis

A  favorable  variance  results  when  budgeted  revenues  exceed  actual  

revenues.

-­‐  True/False  -­‐

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Favorable  Variances

FFaallssee.. An  unfavorable  variance  results  when  budgeted  revenues  exceed  actual  revenues.  

Static  Budgets  and  Flexible  Budgets P.  118