Assets, Liabilities, or Owner's Equity?

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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


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