BUAD 280 Week 5 & 6 Notes
BUAD 280 Week 5 & 6 Notes BUAD 280
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This 2 page Class Notes was uploaded by Manisha Malhotra on Monday October 3, 2016. The Class Notes belongs to BUAD 280 at University of Southern California taught by Eric Allen in Fall 2016. Since its upload, it has received 5 views. For similar materials see Introduction to Financial Accounting in Business at University of Southern California.
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Date Created: 10/03/16
BUAD 280 Week 5 & 6 Notes (9/19) • 1) analyze the transaction • 2) record the transaction, Journal Entry (multiple transactions, 1 account) • 3) update the Taccounts (multiple accounts, single transactions) • 4) prepare the ‘unadjusted’ TB • 5) record adjustments, record any ‘earned’ revenues or ‘incurred’ expenses not yet recorded at the end of the period • deferred or unearned revenue (recording revenue, did u do the work?) • deferred expense (prepaid expense) recording expense before using them • accrued revenue (receivable) did the work before we got paid, increase revenue before we pay for it • accrued expense (payable) (Expenses we have not paid for yet), increase expense before we pay for it • depreciation, accumulated depreciation, reducing PPE • 6) prepare adjusted trial balance • 7) prepare the financial statements • 8) close the books: 0 out the income statement, debit all revenues, credit all expenses, offset dividends • adjusted trial balance does not include cash • recording revenues and expenses (9/26) Revenues are recorded: 1. Delivery has occurred or services rendered 2. There has to be persuasive evidence of an arrangement for payment 3. The price is fixed and determinable 4. Collection is reasonably assured • order received (no revenue), items shipped (it depends on the terms of the sales, contract whether we record a revenue), items received by the customer (recognize a revenue) • free on board (FOB) tell us the point in time ownership of the product passes to the customer • shipping point title/ownership passes upon shipment, record revenue on the shipping date • destination title/ownership passes upon delivery, record a revenue when the customer receives the product • net sales sales revenue is reflected cut the cash equivalent sales price • reduce the gross sales number by 2 things: sales discounts, returns + allowances • sales discount: discount offered to customers to make an early payment (9/28) • accounts receivable reflects the amount still owed from sales on credit • uncertainty regarding the ultimate repayment • direct write off waits to record uncollectible AR until it is actually determined that cash will not be received • Allowance Method each period we record an estimate of the future uncollectible AR • 1. record the estimate matching principle (Recorded in the same period we generate the AR) • 2. write off the actual amount determined to not be repaid • Aging calculate what the ending ADA should be, and then take difference from what we already recorded, + record the difference as bad debt expense
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