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62 Cards in this Set

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Accounting
information and management system to record, and communicate relevant reliable and comparable information
External Users
not involved in running the corporation. lenders, directors, customers
Financial Accounting
Focused on external users with general purpose accounting statements
Internal Users
Run the company - Served by Managerial Accounting.
Ethics
The preferred path is a course of action that avoids casting doubt on one's decisions
GAAP
Generally Accepted Accounting Principles
Set the GAAP in U.S.
Financial Accounting Standards Board (FASB) Private Companies

and SEC - Public Companies
Principles of Accounting GAAP
Objectivity, Cost, going-concern, monetary unit, revenue recognition, business entity
Objectivity Principle
acct info is supported by independent unbiased evidence
cost principle
acct info is based on actual cost, not what i THINK it's worth
going-concern principle
assumption business will continue operating, not fold or sold
monetary unit principle
we express transactions in monetary units
revenue recognition principle
1 Recognized when sold
2 Need not be in cash
3 Measured by cash recv'd plus cash value of other items recv'd.
business entity principle
a business is accounted for separately from business entines, including its owner
limited partnerships (LP)
general partner(s) with unlimited liability and limited partner(s) with liability restricted to amount invested.
Limited Liability Partnership (LLP)
Restricts liabilites to their own acts and acts of those they control. Protects innocent partner from negligence of another. All share debt.
Limited Liability Company (LLC)
Limited Liability of a corporation and the tax treatment of a proprietorship. Most common proprietorship and partnership.
Asset Equation
Assets=Liabilities +Equity
Assets
Resources owned by a company and expected to yield future benefits. Web servers, land, musical instruments. Receivables.
Liabilities
Creditor's claims on assets. Payables.
Equity
Owners claim on assets. Equity=Assets-Liabilities
Also called Net Assets or Residual Equity
Expenses
Decrease equity and are the cost of assets or services used to earn revenues.
Expanded Accounting Equation
Assets= Liabilities + Equities(Owner, Capital - Owner, Withdrawals + Revenues - Expenses)
External Transaction
Between two entities
Internal Transactions
Within one entity
3 Types of Company Operations
Services
Merchandisers
Manufacturers
Expenses Vs. Assets
Rent is an expense because its benefits are used immediately, whereas a printing press is an asset because I expect to derive future benefit from it.
Income Statement (def)
Company revenues and expenses with net income or loss over a period of time due to earnings. Revenue reported first here
Statement of Owner's Equity (def)
Changes in equity over a period of time from net income or loss and owner investments and withdrawals
Balance Sheet (def)
Describes Company financial position _ type and amounts of assets, liabilities and equity at a point in time.
Statement of Cash Flows (def)
identifies cash inflows (receipts) and outflows (payments) over time
Account Form
Assets on the left, liabilities and equity on the right
Report Form
Assetss on top and liabilities and equity on the bottom
Return on assets =
Net Income / Average Total Assets
Financing
Provide means to pay for resources.
Balance Sheet

(Content)
Assets
Liabilities
Owner's Equity
Income Statement

(Content)
Revenues
Expenses
Gains
Losses
Statement of Owner's Equity

(Content)
C. Taylor, Capitol 12/1(Cap.Stoc
add: investment

less:withdrawals
c. taylor capital 12/31
Bad Debt
Bad Debt Expense 3000
Allow f Doubt Acct 3000
Depreciation
Depre. Expense 10000
Accum Deprn-Building 10000
Real Accounts
Continue year after year

Assets, Liability, Equity
Nominal Accounts
Closed at end of period

Revenue, expenses, gains, losses
Revenue and Expense summary
Fee Rev. 100
Wage Exp. 40
Rent Exp. 30
Revenue & Exp. Summary 30
(100-40-30=30)
Adjusting Journal Entries -1
Rent fee in advance
cash 2400
rent rev. rcv'd in adv. 2400
Adjusting journal Entries - 2
6 months elapses-
rent rev. rcvd in adv. 1200
rent revenue 1200
Inventory 1
beg. inv. 40000
net purch. 115000 (add up)
merch avail 155000
end inv <32000> (add up)
cstgoodssold 123000
Inventory 2
cstgoodssold 123000
purch disc 2000
purch r and a 3000
purchase 100000
trans in 20000
inventory 8000adj
Accounts receivable entry
accts receivable 10000
Sales 10000
estimate of all probable bad accounts receivable
estimate made 12/31
bad debts expense 00
allow fr doubtfl acts 00
formal entry when Jones a/r debt goes bad
made on day im sure
allowance for d.a 1111
Accts Rcevlb - Jones 1111
convert A/R to note receivable
note rcvable 10000
acct recvble 10000
discount note to bank process
calc total interest-maturity val
add to principle
multiply by bank discount rate
deduct bank discount
remainder bank will pay 4 note
discount note to bank entries
cash 10094
notes recvbl discounted 10000
Interest revenue 94
Dishonor note receivable and add $50 bank penalty
n/r disounted 10000
note rcvble 10000

acct rcvble 10350
cash 10350
Last receivable - now he's bankrupt
allowance for D/A 10350
acct receivable 10350
materiality
Information of such magnitude that it would influence business decisions
matching principle
expenses are recognized in the accounting period in which the service or product contributes to inflow of revenue
Prepaid fees
unearned fees 0000
fee revenue 0000
mid life loan interest adjustment
interest expense 0000
interest payable 0000
to adjust prepaid partially used rent expense
lower amount in rent expense

prepaid rent 0000
rent expense 0000
adjusting entry for estimate of bad debt
bad debt expense 0000
allowance for dbtfl acct 0000
adjusting entry for depreciation of 4 yr old machine
do this years depreciation only

depreciation exp 0000
accum dep machine 0000