Class notes for chapter 7-9.docx - Class Notes Chapter 7...

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Class NotesChapter 7: Internal Control, Managing Cash, and Making Ethical JudgmentsChapter 5 Homework Notes:Question 1 - There are two classifications of expenses1) Direct Expenses a/k/a/ attributableThese can be directly allocated to the cost of the product in a retail environment these are Cost of Goods Sold these go up proportionately with the volume of sales2) Indirect Expenses a/k/a/ "Overhead" or "Fixed/Semi-Fixed" <ie> rent on buildingGross Profit says how much we have to use after we've paid for product (direct expense) to pay for indirect expensesChapter 6 - (Pages 234-246)F our types of Special Journals:Special JournalTo accumulate like kinds of transactions to make it easier for postingAn accounting journal designed to record one specific type of transaction1) Sales JournalHandles all sales on account/credit in the normal/ordinary course of business Page 236 <ie> of Sales JournalPost in total vs. individual like in general journal2) Purchases JournalHandles all purchases on account/creditDebit purchases/inventory and Credit Accounts Payable** THE NEXT TWO JOURNALS TAKE PRECEDENT OVER ALL OTHER JOURNALS * *3) Cash Receipts JournalIf ANYcash is RECEIVED, the ENTIRE transaction is recorded in this journal4) Cash Payments JournalIf ANY cash is PAID, the ENTIRE transaction is recorded in this journalGENERAL JOURNAL a/k/a/ DEF AUL T JOURNALAny transaction not fitting into the special journals goes hereClass Notes Chapter 7: Internal Control, Managing Cash, and Making Ethical JudgmentsControl AccountMain account that has a detailed subsidiary ledger - balances must equal
Chapter 7 NotesWill talk about internal control next week if there are any questions - study on your ownThere are 3 parts to Chapter 7: 1) Internal Control2) Petty Cash3) Bank ReconciliationBANK RECONCILIAONSreconciling what bank shows to what you have in your book and come up with a TRUE CASH BALANCE (cash available)CHECKBOOK (OURS)= ADJUSTMENTS ADD + Interest+ Errors/Mistakes+ Collect on Accts/Note Receivable - LC- Bank Fees- Errors/MistakesTCB(True Cash Balance)<ie> BANKBOP ADD + D.LT.+ (Deposits in transit)+ Errors/MistakesSUB - OIS Checks(Outstanding Checks)-Errors/MistakesEOP TCB(True Cash Balance)
Class Notes Chapter 7: Internal Control, Managing Cash, and Making Ethical Judgments* Journalize and Post Adjustments to Ledger Accounts

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