ACC 382 Chapter 3 The Accounting Equation Data

ACC 382 Chapter 3 The Accounting Equation Data - which they...

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The Accounting Equation Assets = Liabilities + Owners (Stockholder) Equity
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T Account Explanation Account Title _________________+_______________ _ Left Side | Right Side DEBIT | CREDIT | | |
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Rules of Debit/Credit Balance Sheet Accounts Assets = Liabilities + Capital Stock/R.E. Debit for Debit for Debit for Increase + Decrease - Decrease - Credit for Credit for Credit for Decrease - Increase + Increase +
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Income Statement Accounts Under Stockholders’ Equity Revenue Accounts would: Debit for Decreases (-) and Credit for Increases (+) LESS Expense Accounts would: Debit for Increases (+) and Credit for Increases (-) EQUAL Net Income Revenues EXCEEDING Expenses would Increase SE/ OE as Retained Earnings OR Net Loss in Revenues would Decrease SE/OE and Retained Earnings Dividends Accounts would show a Debit (+) for Increases and Credit (-) for Decreases
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The Accrual Basis of Accounting 1. Revenues are reporting in the period in which they are earned. 2. Expenses are reported in the period in
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Unformatted text preview: which they are earned. 3. The Matching Principle applies here. 4. Cash may or may not be received from customers. 5. This is the Revenue Recognition Concept. The Cash Basis of Accounting 1. Revenues and Expenses are reported in/on the Income Statement in the period in which cash is received or paid out. 2. Wages paid to an employee is an example of an expense. 3. Cash received for a sale is an example of a revenue. Modified Cash Basis 1. Used sometimes by Professional Practices and Service organizations. 2. The Modified Cash Basis adjusts for such items as buildings and equipment. 3. It is a combination of the Cash and Accrual basis of accounting. 4. It is approved by the IRS with prior approval in most cases. Example Accrual Basis $25,000 Cash Basis $15,000 Sales Receipts Cost of Sales (expenses) (12,500) Expenditures (18,000) Income $12,500 Loss $(3,000)...
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ACC 382 Chapter 3 The Accounting Equation Data - which they...

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