Week 2 Lecture
Popular in Basic Accounting Skills
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This 4 page Class Notes was uploaded by Natasha Harvey on Sunday January 25, 2015. The Class Notes belongs to BUS-A100 at Indiana University taught by Vivian Winston in Spring2015. Since its upload, it has received 75 views. For similar materials see Basic Accounting Skills in Business at Indiana University.
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Date Created: 01/25/15
12215 01222015 Updated Income Statement Revenue Cost of Goods Sold Gross pro t All other expenses Net income from operations Gain or loss on sale of investment assets Net income Every time a company sells merchandise its stock in trade it must make 2 balancing entries 0 Record the sale by increasing Revenue and increasing either Cash or Accounts Receivable Transfer the cost of the inventory sold from the balance sheet to the income statement Inventory on the balance sheet is reduced and quotCost of Goods Soldquot on the income statement is increased When a company sells an asset other than its stock in trade only one entry is needed 0 Remove the asset Record the cash received Recognize any gain or loss on the sale Statement of Cash Flows Financing Transactions with stockholders and bankers except interest 0 Investing Buying and selling land buildings and equipment 0 Operating Everything else Beginning cash Cash ows from operations Cash ows from investing Cash ows from nancing Ending cash 0 Only include cash transactions the company made during the penod o If no cash was received or paid the transaction does not go on this statement Other Anything in parenthesis quot0quot means that value is being subtracted Anything that is prepaid expires as time goes by 0 Must make endof period adjustments quot2 years no salvage valuequot it will last for 2 years and then it s worth nothing BE CAREFUL OF DATES necessary when dealing with depreciation quotNet carrying valuequot xed asset minus accumulated depreciation Can t record revenue until it s earned Test question 0 Receive cash then earn it 0 Earn the cash then receive it Compare total assets and total liabilities amp stockholders equity to make sure that your balance sheet is in balance
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