Principles of Accounting I Chapters 1-5 Notes
Principles of Accounting I Chapters 1-5 Notes
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This 3 page Bundle was uploaded by Nicole Rossi on Friday January 22, 2016. The Bundle belongs to at Rowan University taught by Diane Hughes in Fall 2015. Since its upload, it has received 24 views. For similar materials see Principles of Accounting I in Accounting at Rowan University.
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Date Created: 01/22/16
Accounting Midterm Study Sheet Chapter 1 Basic Accounting Equation: ASSETS = LIABILITIES + OWNER’S EQUITY Classifying Accounts: Assets: are the resources a business owns (cash, equipment, supplies, accounts receivable) Liabilities: Claims of those to whom the company owes money (accounts payable, notes payable, sales and real estate taxes payable) Owner’s Equity: Claims of owners (owner’s capital – owner’s drawings + revenue – expenses) CHAPTER 2 Rules of Debit and Credit: Assets: Liabilities: Owner’s Equity: Debits increase = Debits decrease + Debits decrease Credits decrease Credits increase Credits increase Owner’s Capital: Revenue: Debits decrease Debits decrease Credits increase Credits increase Owner’s Drawings: Expenses: Debits increase Debits increase Credits decrease Credits decrease General Journal Entries: Date Debit amount Credit amount Calculate Net Income: REVENUE-EXPENSES= NET INCOME if expenses are greater, then there is a net loss. CHAPTER 3 Adjusting Entries : “services performed, but not yet recorded” = accounts receivable, service rev. “supplies left” = supplies expense, supplies “expired insurance..” insurance expense, prepaid insurance “depreciation for the month” = depreciation expense, accumulated depreciation “interest accrued..” = interest expense, interest payable “accrued salaries” =salaries and wages expense, salaries and wage payable “services related to unearned service revenue..” = unearned service rev, ser. rev. “expensed the cost”/book value (original amount-adjusted number) Interest expense mortgage interest: mortgage payable*rate%/12 CHAPTER 4 Closing Entries: Closing Entries: to close Net Income/loss (if net income is positive): Income Summary is debited, and Owner’s Capital is credited. to close Net Income/loss (if net income is negative): Owner’s Capital is debited, and Income Summary is credited. to close Owner’s Drawings: Owner’s Capital is debited, and Owner’s Drawings is credited. make sure you know what accounts are supposed to be closed. check the side to see what is debited/credited and then when closing it make it the opposite. if revenues are credited, then in closing entry, revenues get debited, and income summary gets credited. if expenses are debited, then in closing entry, expenses get credited, and income summary is debited. Correcting Entries : Correcting Entries: always think about what the correct entry is supposed to be and go from there. if something is credited and it shouldn’t be, debit it for the same amount. if something is debited and it shouldn’t be, credit it for the same amount. if something is debited for the wrong amount and it’s too low, debit it for the amount that is needed to get the two debits to equal the right amount. if something is credited for the wrong amount and it’s too low, credit it for the amount that is needed to get the two credits to equal the right amount. if something is debited and it’s too high of an amount, credit it for the amount extra. if something is credited and it’s too high of an amount, debit it for the amount extra. if there is 3 accounts affected, make sure to check what is supposed to be debited and what’s supposed to be credited. Check given in the original problem. if something is debited/credited right, don’t re-enter it. CHAPTER 5 Sales Revenue - Cost of Goods Sold = Gross Profit – Expenses =Net Income Net income is gross profit less operating expenses In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting purchase returns and allowances When goods are purchased for resale on account by a company using a periodic inventory system, they are debited to Purchases. In a periodic inventory system the entry to record the credit sale of merchandise affects which of the following accounts? Sales Revenue When goods are purchased for resale on account by a company using a periodic inventory system, they are debited to purchases net purchases= purchases-purchase returns and allowances-purchase discounts cost of goods purchased=net purchases+freight in gross profit=net sales-cost of goods sold cost of goods available for sale=beginning inventory+cost of goods purchased cost of goods sold=cost of goods available for sale-ending inventory
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