Accounting

Current Liabilities

AP, Unearned Revenue

current assets

Cash, AR, Inventory

The company paid $925 cash for a minor maintenance of its drafting equipment

Debit: Maintenance expense (925) Credit: Cash (925)

What type of account is a natural credit

Equity

What accounts don't belong on a balance sheet

expenses

Internal users of accounting information

managers who plan, organize, and run a business

How to find Profit Margin

net income/net sales

Debt Ratio

total liabilities/total assets

Which accounting assumption states that a business owner cannot combine his own business with his personal accounts

Business entity

What is the first step in closing out the accounting books for the period

Close revenues to income summary-1

Current Ratio

Current Assets/Current Liabilities

Dunder Mifflin Paper buys $5,000 of office supplies on credit. What accounts are affected, and how are they affected

Debit supplies, credit accounts payable

Taylor Corp. pays for the merchandise purchased in transaction a, less the return in transaction d, within the discount period

Debit: AP (3,500) Credit: Cash (3,430), Merch Inv. (70)

a. Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch her company in exchange for its common stock.

Debit: Cash (1,000), Office equipment (5,000), and Draft equipment (60,000) Credit: Common stock 165,000

Stratton performed half of the services related to $3,000 of cash received in advance.

Debit: Cash (3,000) Credit: Unearned Revenue (3,000)

The company completed and delivered a set of plans for a client and immediately received $6,200 cash

Debit: Cash (6,200) Credit: Service revenue (6,200)

Taylor Corp. pays $150 cash for freight charges incurred

Debit: Delivery Expense (150) Credit: Merch Inv. (150)

Which accounting principle requires companies to report all relevant details regarding financial statements

Full dusclosure

Company paid $3,000 cash for the premium on an 18-month insurance policy.

Debit prepaid insurance (3,000) Credit: Cash (3,000)

Miller's Muffins pays for three years of rent worth $18,000 at the beginning of the year. What would their adjusting entry be at the end of the year?

Debit rent expense for 6,000 and credit prepaid rent for 6,000

The company completed $14,000 of engineering services for a client. Amount is due in 30 days.

Debit: AR (14,000) Credit: Service Revenue (14,000)

Stratton performs a $400 service but has not recorded or billed the customer yet.

Debit: AR (400) Credit- Service revenue (400)

Taylor Corp. sells $8,000 of inventory, terms 3/10, n/30, FOB Destination.(seller pays) The goods cost Taylor Corp $2,500.

Debit: AR (8,000), COGS (2,500) Credit: Sales Revenue (8,000), Merch Inv. (2,500)

Taylor Corp. returns $500 of merchandise inventory purchased in transaction a, as it did not meet their needs.

Debit: Accounts Payable (500) Credit: Merch Inv. (500)

The company paid $2,500 cash for advertisements on the web during June

Debit: Advertisement expense (2500) Credit: Cash (2500)

Depreciation on the company's equipment for the year is computed as $18,000.

Debit: Depreciation Expense- Equipment (18,000) Credit: Accumulate Depreciation- Equipment (18,000)

Stratton records the monthly depreciation on equipment, $300

Debit: Depreciation expense-equipment (300) Credit: A/D-equipment (300)

The Prepaid Insurance account had a $6,000 debit balance on December 31st, 2017, before adjusting for the costs of any expired coverage. An analysis of the company's policies showed that $1,100 of unexpired insurance remains.

Debit: Insurance Expense (4,900) Credit: Prepaid Insurance (4,900)

The company received a bill for rent of equipment that was used on a recently completed job. The $1,333 rent cost must be paid within 30 days

Debit: Rent expense (1,333) Credit: AP (1,333)

The company fulfills a payment on their prepaid rent for $450.

Debit: Rent expense (450) Credit: Prepaid rent (450)

Customer in transaction c returns $1,000 of merchandise. The merchandise is valued at $300 for Taylor, and they restore it to inventory.

Debit: Sales Returns and Allowances (1,000), Merch Inv. (300) Credit: AR (1000), COGS (300)

Office Supplies account had a $700 debit balance on December 31st, 2016; $3,480 of office supplies were purchased throughout the year. The December 31st, 2017, physical count shows $300 of supplies is leftover

Debit: Supplies Expense (3,880) Credit: Supplies (3,880)

The supplies account is listed as $2,000 for the beginning of the month, but a count shows there is only $800 worth of supplies left.

Debit: Supplies expense (1,200) Credit: Supplies (1,200)

Two-thirds of the work related to $15,000 of cash received in advance was performed this period.

Debit: Unearned Revenue (10,000) Credit: Service Revenue (10,000)

The company paid $1,200 cash for wages to a drafting assistant.

Debit: Wages Expenses (1,200) Credit: Cash (1,200)

Company accrues its weekly wages of $1,200 that will have to be paid in January

Debit: Wages expense (1,200) Credit: Wages Payable (1,200)

how to find gross margin

(Total revenues- COGS)/Total revenue

Labs' Licorice had $500,000 in sales, $300,000 worth of expenses, and $50,000 in net income at year end. What is Labs' profit margin?

10%

How does a company calculate COGS?

BI+purchaes-EI

Services were completed on account for $750.

Debit AR for 740 and credit Service Revenue for 70

FOB shipping point

Goods in transit are owned by the buyer

FOB destination

Goods in transit are owned by the seller

Income statement- Expenses

Gross profit- Operating expenses= Income from operations

Income Statement- Net income

Income from operations-Interest expense= Net income

external users of accounting information

Investors, creditors, employees, labor unions, customers, suppliers, government regulatory agencies, financial intermediaries

Profit margins

Net Income/Sales

Return on Assets (ROA)

Net Income/Total Assets

Statement of Retained Earnings

Retained Earnings (BI) + Net Income-Dividends

temporary accounts

Revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period.

Income Statement-Sales

Revenue-returns=net sales Net sales-COGS=Gross profit

how to find net income

Revenues - Expenses

When does a merchandiser have to record 2 journal entries?

When they sell goods (sales/revenues, COGS)

what is true about all expense accounts

You subtract it from revenues to get net income

current assets

cash and other assets expected to be exchanged for cash or consumed within a year

Wayne Corporation sold many replicas of the Batmobile this year, and their net sales was $500,000, their goods available for sale totaled $650,000, and their net income was $40,000. What is Wayne Corporation's gross margin?

not enough info to complete this ratio