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Class Notes 06/04
Class Notes 06/04 - Chapter 1 & 2
| Question | Answer |
|---|---|
| Assets = | Liability + Stockholder's Equity |
| Economic Resources = | Creditor's Equity + Stockholder's Equity |
| Stockholder's Equity | Contributed Capital & Retained Earnings |
| 4 Financial Statements | Income, RE, Balance Sheet, & Cash Flow |
| Income Statement | title needs to include period end date |
| State of Retained Earnings | title needs to include period end date |
| Balance Sheet | particular point in time |
| Statement of Cash Flow | beginning to end, change in cash |
| GAAP | Generally Accepted Accounting Principals |
| CPA | Certified Public Accountant |
| IRS | Internal Revenue Service |
| Ethics | Integrity, Objectivity, & Independence |
| Recognition | the determination of when a business transaction should be recorded |
| Valuation | the process of assigning a monetary value to a business transaction |
| Classifications | the process of assigning transactions to the appropriate accounts |
| Double Entry System | all transactions must be recored with at a least one debit and one credit |
| Accounts | basic storage for accounting data and similar transactions |
| T Account | simplest form, used to analyze transactions |
| Asset | Debit (left side) |
| Liability, Stock, Earnings, Revenue | Credit (right side) |
| Journal Form (line 1) | date, debit account and debit ammount |
| Journal Form (line 2) | credit account and credit ammount (indented) |
| FOB SP | free on board shipping point |
| FOB Des. | free on board destination |
| + vs - Question 1 | What accounts? |
| + vs - Question 2 | What type - A, L, OE, E, R? |
| + vs - Question 3 | Did + or - ? |
| + vs - Question 4 | Do debit or credit? |
| Xerox Overstates Revenue | records lease revenues when leases signed rather than over lease term |
| Enron Overvalues Assets | investors and employees lose billions |
| WorldCom Misclassifies Expenditures | Understates expenses by more tahn $10 billion |
| Assets | Increase by debits, Decrease by credits |
| Liabilities/Equity | Decrease by debits, Increase by credits |
| Normal Balance of Account | the usual balance of an account, the side that increases an account |
| Analyze/Record Trans. Step 1 | State the transaction |
| Analyze/Record Trans. Step 2 | Analyze the transaction to determine which accoutns are affected |
| Analyze/Record Trans. Step 3 | Use T accounts to show how the transaction affects the accounting equation |
| Analyze/Record Trans. Step 4 | Show the transaction in journal form |
| Preparing Trial Balance | ensures that total debits equal total credits, usually prepared on the last day of the month |
| Limits of Trial Balance | doesn't prove trans. were analyzed correctly or whether amounts were recorded in the proper accounts |
| Cash Flows | compaines must be able to pay bills on time, cash payments can be delayed by using credit terms offered by vendors |
| General Journal | journalizing is the process of recording all transactions chronologically in a journal |
| General Ledger | used to record the detail of each trans, used to update each account |
| Journalizing a Trans 1 | record the date |
| Journalizing a Trans 2 | names of accounts debited and dollar amounts on same line in debit column |
| Journalizing a Trans 3 | names of accounts credited and dollar amounts on same like in credit column |
| Journalizing a Trans 4 | explanation of transaction |
| Journalizing a Trans 5 | account identification numbers |
| Posting a Trans 1 | locate debit account in the ledger |
| Posting a Trans 2 | enter date of transaction and journal page number in post. ref. column |
| Posting a Trans 3 | enter in debit column amount of debits from journal |
| Posting a Trans 4 | calculate account balance and enter in appropriate balance column |
| Posting a Trans 5 | in journal post. ref. column, enter account number to which amount was posted |
| Posting a Trans 6 | repeat for credit entry |
Created by:
IowaTheta32
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