- Accumulated depreciation

- Allowance for uncollectible accounts

- Unearned revenue

- Interest payable

- Salary payable

- Revenue (Credit)

- Owner's investment

- Expense (Debit)

- Owner's withdrawal

- Each accounting entity is stands apart as a separate economic unit

- Accounting information must be verifiable

- Record costs at their actual value, not at the value you think is worth

- Assume entity will remain in operation

- Assume there is no inflation

- Accrual accounting

- Cash-basis accounting

- Yearly/fiscal yearly

- Interim periods

- When: revenue recorded when it has been earned, not before

- Amount: actual cash value of the item transacted

- 1. Measure all expense incurred during period

- 2. Match expenses against revenues of the period

- Goal: find net income or loss during period

- Paid

- Collected

- No. of units sold

* Unit Cost

- Costing methods

(to obtain unit cost)

- Purchases are not recorded into an Inventory account

- Ending inventories are simply brought over to the next period

- Same as perpetual, except there is no accompanying entry to Inventory/Cost of Goods Sold

- Cost of Goods Available

- Ending inventory

- Purchase price

- Purchase discounts

- x = % discount

- y = cash payment due in days

- Transportation cost on purchased goods

- Transportation cost on goods sold

- Shipping point

- Destination

- Past usual Gross Profit Percent

* Current Sales Revenue

- Current Sales Revenue

- Estimated Gross Profit

- Cost of Goods Available

- Estimated Cost of Goods Sold

- Any differing amount is adjusted for shrinkage

- Demonstrates accounting conservatism

- Requires inventory to be reported at the lower of:

- Errors in the counting of actual inventory on hand

- Same accounting methods from period to period

- Report enough information for outsiders to make wise decisions about the company

- Account only for significant items—"material"—items that may cause someone to change a decision

- Goal: to report realistic figures

- Exercise caution in reporting figures

- Sales revenue

- Sales returns and allowances

- Sales discounts

- Net sales revenue

- Cost of goods sold

- Beginning inventory

+ Net purchases

- Obtaining the actual number of units on hand

* Unit Cost

- 1.0 is considered risky

- 0.8 is considered risky

- Net sales revenue = Sales revenue

- Sales returns and allowances

- Sales discounts

- Gross profit = Net sales revenue

- Cost of goods sold

- Average inventory = (Beginning inventory + Ending inventory) / 2

- Means more profits

- Net current receivables = Accounts receivable - Allowance for uncollectible accounts

- It depends on company too. Wal-Mart has a Quick ratio of 0.2 but it is fine.

- Average net receivables = (Beginning net receivables + Ending net receivables) / 2

- Net sales revenue = Sales revenue

- Sales returns and allowances

- Sales discounts

- 3 Questions + Map

- Posting to the T-accounts

- Part of the Accounting Worksheet

- Balance of the accounts during the period

- NOT a financial statement

- p.77 ex.2-12

- Part of the Accounting Worksheet

- p.198 ex.4-2 to 4-6

- p.143 ex.3-10

- a. Income Statement

- b. Statement of Owner's Equity

- c. Balance Sheet (unclassified)

- d. Statement of Cash Flow

- a. Journalize adjustments

- b. Post adjustments

- Closing involves owner's equity only

- Income Summary Account

- Steps

- Part of Accounting Worksheet

- Current

- Long-Term

- Account format

- Report format

- a. Cash- (Cr) - Asset+ (Dr)

- Adjusting entry:

b. Asset- (Cr) - Expense+ (Dr)

- Prepaid rent

- Supplies

- a. Liability+ (Cr) - Cash+ (Dr)

- Adjusting entry:

b. Revenue+ (Cr) - Liability- (Dr)

- Unearned revenue

- a.Liability+(Cr)- Expense+(Dr)

- Adjusting entry:

b. Cash- (Cr) - Liability- (Dr)

- Interest exp. (i.e. loan interest)

- Salary expense

- a.Revenue+ (Cr) - Asset+ (Dr)

- Adjusting entry:

b. Asset- (Cr) - Cash+ (Dr)

- Interest rev. (i.e. bank interest)