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Intermediate Accounting Notes

Essay by   •  February 8, 2017  •  Course Note  •  2,400 Words (10 Pages)  •  292 Views

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Assets=claims  - liability

                          - Equity  - contributed capital  - common stock/ treasury stock

                            - earned capital  - rev/ Exp. / gains/ losses

  • Debit
  • Contra Assets account
  • Current vs non-current (1 yr)

     *notes receivable: could be current or non-current cuz there are both principle and interest.

     *prepaid: depends on when you get the benefit.

  • Credit
  • current vs non-current liability

permanent accounts & Nominal accounts

           ⬇️                        ⬇️

bal. sheet                      inc. stmt.

Example

  • Truck purchased at price of $20,000 for $18,000 plus options of 2,500.
  • 5 yr life, no savage
  • At end of yr 3 , sold for for 9,300
  • Record yr 0, yr1, yr 3

Year 0  Dr Assets - Truck 22,500

              Cr  Cash                20,500

Year 1  Dr Depreciation Expense        4,100

            Cr  Accumulated Dep             4,100

Year 3  Dr Dep        4,100

            Cr Accu. Dep        4,100

            Dr Accumulated Dep                12,300

            Cr Assets                             12,300     Carrying Amount of the truck=8,200 So gain=1,100

        Dr Cash        9,300

            Cr Gain           1,100

            Cr Truck           8,200

Accounting Cycle

  1. Economic Event takes place
  1. Analyze the transaction.

        - Measurement.    ( is law suit an economic event? depends on probability/ability  

                                  to assess/ ability to measure)

        - Timing

3. Journalization.

        Dr

           Cr

        Explanation.

   - Prep

   - Approve

   - Post

General journal.

    Sales journals

    Cash receipt journal

    Purchases J.

    Disbursement J.

4. Posted to Account

        General ledger. (contains all the accounts)

                -subsidiary ledger (such as account receivable)

                                        AR[pic 1][pic 2]

                         customer

                        details

   

                

5. Trial Balance

List of all a/c + its balance

A/C #                A/C Name                DR                CR

1001                cash                        1000

1101                A/R                        10500

                                        X                X

Adjustment

  - Depreciation  (also a kind of deferral)

  - Accruals (see if miss some expenses? )

        Incurred but not paid

        Earned but not received.

  - Deferral. (like prepaid.)

EX. Note Payable 8/m on 11/1

      @7.2% payable every six month

12/31/XX

        Dr interest expense

            Cr interest payable

1/1/XX

        Dr Interest Payable        12,000

           Cr Interest Exp                    12,000

5/1/XX

        Dr interest Expense                36,000

           Cr Cash                                    36,000

6.produce financial statements

    “BIG 4”

7. Close process

     1) close all revenue account to income summary

     2) close all expense account to income summary

     3) close income summary to retained earnings.

income summary ➡️ a nominal account.  

Balance of income summary➡️net income


Chapter 24

Footnote Disclosure

FN #1  - Organizational issues.

FN #2  - Summary of Significant Accounting Policies  (SOSAP)   ex: depreciation                                    method; FIFO or LIFO; Cost of Inventory.

                * FIN 48 income tax

                * Contingencies.

                * Investments.Risk ( risk at how you value them)

                                    - lv 1 traded on the security market. observable

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