LECTURE11_cycle1_Blackboard

LECTURE11_cycle1_Blackboard - Conventional Accounting...

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Conventional Accounting Revisited Session Objectives Understand the purpose of the accounting cycle Employ surrogates for the accounting equation as a tool of analysis Undertake transactions analysis with new tools
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Conventional Accounting Revisited A ccounting Cycle = process by which a firm’s activities get reflected in a firm’s financial statements.
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FACTS: 1/1 INVEST $2,000 IN BUSINESS 1/15 PURCHASE $400 INVENTORY ON ACCOUNT 1/25 CASH SALES = $800 1/25 COST OF SALES = $400 A = L + OE Cash Inventory A/P Capital 1/1 2,000 2,000 1/15 400 400 1/25 800 800 REV. 1/25 _____ (400 ) ____ (400 )EXP. BAL. 2,800 0 400 2,400
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Income Statement Revenue 800 -Expenses 400 Net income 400 Balance Sheet Cash 2,800 A/P 400 Inventory -0- Capital 2,400 Total 2,800 2,800
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LEDGER ACCOUNT JOURNAL ENTRY A = L + OE XX XX XX XX XX XX
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ACCOUNT = simply a device that enables you to record the beginning and ending balance of an item and increases or decreases thereto.
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ASSET ACCOUNT LIABILITY REVENUE EXPENSE ACCOUNT ACCOUNT OWNERS’ EQUITY ACCOUNT ACCOUNT
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A = L + OE + - + + - - E R + - - +
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Relationship Between Assets and Expenses asset expense Unexpired Expired Financial Position Statement Income Statement cost cost
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Asset - Supplies +’s -’s Beginning Balance 800 600 Ending Balance 900 500
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Liability - Account Payable -’s 500 +’s 800 Beginning Balance 600 900 Ending Balance
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= L + OE RULE OF DEBITS AND CREDITS E R + - - + - + + - - + Dr. Cr. Dr. Cr. Dr. Cr. Dr.
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This note was uploaded on 05/24/2008 for the course ACC 203 taught by Professor Choi during the Spring '08 term at NYU.

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LECTURE11_cycle1_Blackboard - Conventional Accounting...

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