MIDTERM STUDY GUIDE CHAPTERS 1-4
MIDTERM STUDY GUIDE CHAPTERS 1-4 Acc101
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This 3 page Study Guide was uploaded by Isabella Casadei on Monday October 12, 2015. The Study Guide belongs to Acc101 at DePaul University taught by Professor Joanna Dabrowska in Fall 2015. Since its upload, it has received 29 views. For similar materials see INTRO TO MANAGERIAL ACCOUNTING in Accounting at DePaul University.
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Date Created: 10/12/15
Chapter 1 Use of Accounting Info amp Financial Statements 339 Accounting Equation gt Assets Liabilities Stockholder s Equity 339 Dividends distribution of a company s earnings decided to a board to a class of it s shareholders gt Statement of Retained Earnings deducted gt Cash Shares of Stock or other Property oz 4 Financial Statements gt Income Statement summarizes the revenues earned and expenses incurred by a business over an accounting period I Revenues Expenses Income before taxes Income tax expenses Net IncomeLoss I Forthe Month Ended gt Statement of Retained Earnings shows the changes in retained earnings over an accounting period I Beginning balance of RE Net Income Subtotal Less Dividends End balance RE I Forthe Month Ended gt Balance Sheet shows the financial position of a business on a certain date usually at end of month or year I Assets Liabilities SE I One date EX December 31st 2015 gt Statement of Cash Flows focuses on liquidity that is balancing the inflows and outflows of cash to enable to business to operate and pay its biIIs when done I Cash flows from operating activities investing activities and financing activities I Forthe Month Ended v Income Statement Net income gt Statement of RE RE gt Balance Sheet ALSO on Cash Flows gt cash from Balance Sheet net income from Income Statement and dividends from RE v Who prepares financial statements v Auditors gt someone who examines the company s financial statements and the accounting systems controls and records that produced them They make sure the statements were prepared in accordance to the GAAP v Organizations that issue accounting standards gt Financial Accounting Standards Board FASB develops GAAP gt Internal Revenue Service IRS interpret and enforces the tax laws that specify the rules for determining taxable income Chapter 2 Recording Business Transactions oz Rules of Double Entry gt Every transaction affects at least two accounts gt Total debits total credits oz Normal balances gt Debit Side gt assets dividends expenses gt Credit Side gt liabilities common stock RE revenues Chapter 3 Adjusting Accounts 339 Net Income net increase in stockholder s equity that results from a company s operations Revenues exceed expenses 339 Net Loss when expenses exceed revenues oz Revenues increases in stockholder s equity that result from performing business activities 339 Expenses decreases in stockholder s equity resulting from the cost of doing business oz Adjusting entries gt Only include gt Income Statement account amp Balance Sheet account gt NEVER include cash gt made on the last day of the period gt Types of adjusting entries I Expenses 0 DR Expense 9 CR Payable 0 DR Expense 9 CR Prepaid I Revenue 0 DR Receivable 9 CR Revenue 0 DR Unearned Revenue 9 CR Revenue I Misc 0 DR Depreciation Expense 9 CR Accumulated Depreciation 0 DR Supplies Expense 9 CR Supplies 339 Depreciation the logical allocation of asset cost to the accounting periods benefited gt Depreciation Expense a temporary account used to record depreciation in a given accounting period gt Accumulated a permanent account that shows the total depreciation recorded in all prior periods It s a contra account I Contra account shown on a financial statement as a deduction from related account oz Closing Entries gt Close the credit balances accounts revenues on the income statement to income summary I debit revenues credit income summary gt Close the debit balances accounts expenses on the income statement to income summary I debit income summary credit all expenses gt Close the income summary account balance to the RE account I debit income summary credit RE RE credit income summary debit income summary gt Close the dividends account balance to the RE account I debit RE credit dividends Chapter 4 Classified Balance Sheet oz Categories gt Assets I Current Assets 0 cash shortterm investments notes receivable accounts receivable inventory win a year prepaid assets supplies I Investments 0 land held for future use equipment not used in business longterm notes receivable I Property Plant amp Equipment 0 currently used in business I Intangible Assets gt Liabilities I Current Liabilities 0 notes payable accounts payable current portion of longterm debt taxes payable salaries payable I Long Term Liabilities o mortgages payable longterm notes payable bonds payable gt Corporation I Contributed Capital 0 common stock I Retained Earnings
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