Assets, Liabilities, or Owner's Equity?
Advertising Expense
Operating Expense (Debit), Income Statement
units of activity formulas
dep cost/units of activity=dep cost per unit, dep cost per unit*units of activity in a year=annual dep exp
average collection period in days formula
365/ar turnover=average collection period in days
What are the characteristics of accounting information?
Information is relevant and faithfully represented adn that information is timely and reliable.
Copyrights
Intangible Asset (Debit)
Goodwill
Intangible Asset (Debit)
What is the Expanded Accounting Equation?
Assets=Liabilities+Owner's Capital-Owner's Drawings+Revenues-Expenses
What is the Accounting Equation?
Assets=Liabilities+Owner's Equity
Sales Discounts
Contra-Revenue (Debit), Income Statement
Sales Returns and Allowances
Contra-Revenue (Debit), Income Statement
Cost of Goods Sold
Cost of Goods Sold (Debit), Income Statement
What is a liability?
Credit (Notes Payable, Accounts Payable)
What is owner's equity?
Credit (Owner's Capital, Owner's Drawings, Revenues, Expenses)
Accounts Receivable?
Current Asset (Debit)
Interest Receivable
Current Asset (Debit)
Prepaid Insurance
Current Asset (Debit)
Prepaid Rent
Current Asset (Debit)
Inventory
Current Asset (Debit), If a periodic system is used, Inventory also appears on the income statement in the calculation of COGS.
Supplies
Current Asset (debit)
Allowance for Doubtful accounts
Current Asset-Contra (Credit)
Debt Investments
Current Asset/Long Term Investment (Debit)
Accounts Payable?
Current Liability (Credit)
Dividends Payable
Current Liability (Credit)
Interest Payable
Current Liability (Credit)
Unearned Service Revenue
Current Liability (Credit)
Salaries and Wages Payable
Current Liability (credit)
Notes Payable
Current Liability/Long-term Liability (credit)
Income Taxes Payable
Currently Liability (Credit)
What is an asset?
Debit (Cash, Accounts Receivable, Equipment)
Formula for Gross Profit Percentage
Gross profit/net sales=gross profit percentage
Formula for Gross Profit
Gross profit=net sales - COGS
Recording transactions helps to do what?
Helps ensure logical method for recording transactions.
Income Tax Expense
Income Tax Expense (Debit), Income Statement
Patents
Intangible Asset (Debit)
How do you find Interest?
Interest= (face value of note)*(annual interest rate)*(time in terms of one year or 1/12)
Bonds Payable
Long-Term Liability (Credit)
Mortgage Payable
Long-Term Liability (Credit)
Premium on Bonds Payable
Long-Term Liability (Credit)
Discount on Bonds Payable
Long-Term Liability-Contra (Debit)
Formula for calculating net income
Net income=gross profit-operating expenses
Amortization Expense
Operating Expense (Debit), Income Statement
Bad Debt Expense
Operating Expense (Debit), Income Statement
Depreciation Expense
Operating Expense (Debit), Income Statement
Freight-Out
Operating Expense (Debit), Income Statement
Insurance Expense
Operating Expense (Debit), Income Statement
Rent Expense
Operating Expense (Debit), Income Statement
Salaries and Wages Expense
Operating Expense (Debit), Income Statement
Supplies Expense
Operating Expense (Debit), Income Statement
Utilities Expense
Operating Expense (Debit), income statement
Maintenance and Repairs Expense
Operating Expense, (Debit) Income Statement
Selling Expenses
Operating Expenses (Debit), Income Statement
Interest Expense
Other Expense (Debit), Income Statement
Loss on Disposal of Plant Assets
Other Expense (Debit), Income Statement
Gain on Disposal of Plant Assets
Other Income (Credit), Income Statement
Interest Revenue
Other Income (Credit), Income Statement
Owner's Capital
Owner's Equity (Credit), Owner's Equity & Balance Sheet
Land
Plant Asset (Debit)
Accumulated Depreciation?-Equipment
Plant Asset-Contra (Credit)
Buildings
Plant Assets (Debit)
Accumulated Depreciation?-Buildings
Plant Contra-Asset (Credit)
Sales Revenue
Revenue (Credit), Income Statement
Service Revenue
Revenue (credit), income statement
Common Stock
Stockholder's Equity (Credit)
Paid in Capital in Excess of Par-Common Stock
Stockholder's Equity (Credit)
Paid in Capital in Excess of Par-Preferred Stock
Stockholder's Equity (Credit)
Preferred Stock
Stockholder's Equity (Credit)
Retained Earnings
Stockholder's Equity (credit), Retained Earnings Statement and Balance Sheet
Treasury Stock
Stockholder's Equity, (Debit)
Owner's Drawings
Temorary account closed to Owner's Capital (Debit), Owner's Equity
Income Summary
Temporary Account Cosed to Retained Earnings (not applicable, normal
Dividends
Temporary Account closed to retained earnings (Debit), Retained Earnings Statement
declining balance formulas
beg book value*declining balance rate=annual dep expense
What are the Principles for designing an effective accounting info system?
cost effective, useful output, flexible (not static)
Formula for estimated cost of ending inventory
cost of goods available for sale-estimated cost of goods=estimated cost of ending inventory
formula for weighted average unit cost
cost of goods available for sale/total units available for sale=weighted average unit cost
straight line formulas
cost-salvage value=dep cost, dep cost/useful life=annual dep expense
Stock Investments
current asset/long-term investment (Debit)
formula for maturity value
face value+accrued interest=maturity value
how to calculate accumulated dep of an asset
for all the years up to the current date
How to determine cost for acquiring land:
land=sticker price+realtor fee+permits+grading and filling+tearing down buildings
Average receivable formula
net credit sales/avg net AR=AR turnover
Formula for estimated COGS
net sales - estimated gross profit=estimated COGS
What is the asset turnover ratio?
net sales/(beginning+ending assets)/2
Cash
Current Asset (Debit)
Equipment
Plant Asset (Debit)
steps for bank reconciliation
1) deposits in transit 2)outstanding checks 3)errors 4)bank memoranda
