ACC231 - Wk 04 - Student Materials

ACC231 - Wk 04 - Student Materials - ACC231 - Fall 2009...

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Fall 2009 Copyright © School of Accountancy, Arizona State University Week 4 – Page 1 ACC231 - Fall 2009 Week 4 Overview (September 16 - September 22) Material we cover this week Solid Footing chapters 8, 9 (middle of p143-145) and 10. What are we learning this week? 1. Adjusting Journal Entries 2. Dividends 3. Basic Financial Statements Detail of Information you should know: 1. Adjusting Journal Entries (AJEs) a. Conceptually Understand and be able to prepare adjusting journal entries for i. Unearned Revenue (Deferred Revenue) ii. Accrued Assets (Accrued Revenue) b. For all FIVE types of AJEs, be able to indicate the effect on the accounting equation and the F/S of both MAKING the AJE and NOT making the AJE 2. Dividends a. Understand the difference among date of declaration, date of record and payment date b. Prepare journal entries related to dividends c. Understand how dividends influence the Statement of Retained Earnings and Expanded Accounting Equation d. Be able to prepare complete Statement of Retained Earnings e. Be able to record dividend entries in expanded accounting equation 3. Basic Financial Statements a. Be able to classify accounts (e.g. Asset, Liability, Equity, Revenue, Expense) b. Be able to differentiate between multi-step and single step Income Statements c. Be able to differentiate between classified and unclassified Balance Sheets d. Understand sequencing of current assets and current liabilities NOTE: You will be given the formula for interest income on the exam and do not need to memorize this Interest income formula Principal amount of investment x interest rate x 1/12 = monthly interest income
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Fall 2009 Copyright © School of Accountancy, Arizona State University Week 4 – Page 2 WEEK 4 - TERMINOLOGY AND CONCEPTS Items are definitional in nature. We may or may not review these items in Mega but you are responsible for knowing this information for homework, quizzes and exams. Classification of Accounts Assets, Liabilities, Stockholders’ Equity, Revenues and Expenses represent the five classifications used for financial reporting. The five classifications are highlighted in the following definitions. Assets – resources owned by the entity; shown on the Balance Sheet. Current Assets – resources that are expected to be converted into cash or used up within one year or one operating cycle, whichever is longer. Note that current assets are listed on a Classified Balance Sheet in order of LIQUIDITY (ability to be converted into cash). Cash – funds readily available for use such as checking and savings accounts and petty cash. Cash is always listed first as it is the most liquid asset. Marketable Securities (also referred to as “short-term investments”) - Marketable securities represent cash that is invested to earn a return, but that can be easily accessed. Marketable securities have a maturity of less than one year and include such things as Certificates of Deposit, US Treasury bills (T-bills) and commercial paper. Marketable securities are very liquid and can easily be sold and
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This note was uploaded on 09/03/2009 for the course ACC ACC 231 taught by Professor Samuels during the Spring '09 term at ASU.

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ACC231 - Wk 04 - Student Materials - ACC231 - Fall 2009...

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