Accounting
Accounting cycle
1)Record journal entries 2)post journal to ledger 3)prepare trail balance 4) prepare financial statement
Business entity concept means
The entity is an individual economic unit for which data are recorded, analyzed and reported
Accruals
Accrued revenue Accounts revivable (Cash we haven't got yet)
The objectivity principle requires that
Amounts recorded in financial statement a must be based on independently evidence- ( we can value it and record it)
Best describes accounting
An info system that provides reports to stakeholders.
Depreciation expense is an... And what it is followed by?
Asset (debit) and Accumulated depreciation (credit)
Prepaid expenses are
Assets
Accounting equation
Assets=liabilities+equity Or Equity=liabilities-assets
Examples of Assets
Cash-supplies-A/R-Equipment-Land-Prepaid Expenses-
Account in proper order-
Cash/AR/supplies/equipment- A/P- Drawing/capital- Service revenue- Operating expense
Public accountants Are...
Certified public accountants
Received cash for service is journalised as
Fee earned which is a revenue
GAAP stands for
Generally accepted accounting principals
Book value is
How much money has not been depreciated
Proprietorships
Individuals own it 70%
Debts owed by business are
Liabilities
Unearned revenue is a
Liability because you haven't preformed task yet
Matching concept
Matching the expenses with the revenue. To find net loss or income
Partnership
More than 1 owner 10%
Deferrals are
Prepaid expenses Unearned revenues (cash)
Accounting a role in business
Provide info to managers to operate business and to stakeholders to make decisions regarding the condition of company
Cost concept
Recorded cost of assets
Owners equity is increased by
Revenue/ capital
Net income is
Service revenue - Operating expenses.
3 types of businesses
Service- Merchandising- manufacturing-
Trail balance is prepared to
Summarize the account balances to help financial statements
Unit of measure concept
US dollar- Let reader know they type of currency
Time concept
We can create segments of time- make time periods
