95%(184)175 out of 184 people found this document helpful
This preview shows page 1 - 3 out of 65 pages.
Accounting HelpSalaries expense is classified as an OPERATING item on the income statement.Common stock and retained earnings both found on statementt of shareholder’s equity.Items are classified on the statement of cash flows as operating, investing, and financing activites.Components of income statement are classified according to operating and non-operating terms.Paid in capital and retained earnings are included in shareholders equity.Short term liabilities satisfied with in one yearThe STATEMENT OF CASH FLOWS reports the events that caused cash to change during the period. Current assets are cash, converted into cash, or used up in one year.Depreciation expense is classified on income statement as an operating expense.Income summary account provides a check that all TEMPORARY ACCOUNT have been properly closed.Effects of a transaction on assets, liabilities, and equity: Problem type 2Hill Company purchases printing equipmentfor $8,000, paying 40% of the amount due in cashand agreeing to pay the balance ata later date.Equipment, an individual asset account, increases.Cash, an individual asset account, decreases.Accounts Payable, an individual liability account, increases.Capital Stock is not affected.Retained Earnings is not affected.Q Green Company records this week's salary expense for their only employee, $1,200. However, the amount will not actually be paid to the employee until the first of next month.A Liability account increase, retained earnings decreaseQBrown Company receives money from customers who have been previously billed, on account, $8,200.ACash, an individual asset account, increases.Accounts Receivable, an individual asset account, decreases.No individual liability accounts are affected.Capital Stock is not affected.Retained Earnings is not affected.Q Torres Company purchases store supplies for $1,800, paying 20% of the amount due in cash and agreeing to pay the balance ata later date.A Asset increase; asset decrease; liability acct increasesQ Kelly Company receives their utility bill for $500 on July 31. They intend to pay the bill on August 20.A Liab increase; ret earnings decrease
Q Patterson Company purchases store supplies for $2,600, paying 20% of the amount due in cash and agreeing to pay the balance at a later date.A Asset Increase, decrease; liab acct increaseQ Peterson Company pays money for insurance in advance of using the insurance, $8,400.A Cash, an individual asset account, decreases.Prepaid Insurance, an individual asset account, increases.No individual liability accounts are affected.Capital Stock is not affected.Retained Earnings is not affectedQ Perry Company purchases equipment for $5,000, cash.A Asset increase; decreaseCompleting a retained earnings statementSolving for dividendsThe basic equation for determining the net change in retained earningsis:Net change in retained earnings = Net income- DividendsSolve for dividends:Dividends= Net income - Net change in retained earnings= $25,800 - $12,900= $12,900Solving for beginning retained earningsThe basic equation for ending retained earnings is: