Lecture05 - Lecture 5 Accounting for Income: Revenues and...

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1 Lecture 5 Accounting for Income: Revenues and Expenses
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2 Permanent vs. Temporary Accounts At the end of the period, income accounts are closed back into the retained earnings. all revenues and gains must eventually be included as increases in RE and all expenses and losses must eventually be included as decreases in RE
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3 Accounting for Revenues and Expenses Revenue – Debit or Credit? Revenue represents an increase in Retained Earnings, a Shareholders’ Equity account, therefore increases in revenues are recorded as credits . Expense – Debit or Credit? An expense represents a decrease in Retained Earnings, therefore increases in expenses are recorded as debits .
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4 Increases In Assets Decreases In Liabilities Decreases in CS and APIC Increases in Expenses (Decreases in Revenues) Losses Increases in Dividends Debit Entries List of Debit and Credit Entries Decreases in Assets Increases in Liabilities Increases in CS and APIC (Decreases in Expenses) Increases in Revenues Gains (Decreases in Dividends) Credit Entries
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5 The Accounting Cycle What is Accounting Cycle? The sequence of accounting procedures used each period to record transactions and events and to prepare financial statements. Steps of the Accounting Cycle 1. Make journal entries 2. Post to journal entries to the ledger
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6 1. Calculate the ending balances and prepare the unadjusted trial balance . 2. Make adjusting entries in the journal. 3. Post the adjusting entries to the ledger. 4. Prepare an adjusted trial balance. 5. Prepare the
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This note was uploaded on 05/20/2010 for the course ACCT 101 taught by Professor Briancadman during the Spring '10 term at Penn College.

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Lecture05 - Lecture 5 Accounting for Income: Revenues and...

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