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part 1 - Part one Asset Accounts Cash(its not revenue...

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Part one Asset Accounts: Cash(it’s not revenue) accounts receivable: credit sales or sales on account or on credit note receivable(promissory note) prepaid accounts(prepaid expense) : (1) all expired and used prepaid accounts are recorded as regular expenses. (2) all unexpired and unused prepaid accounts are recorded as assets( reflecting future use in future periods supplies(when they are unused, they are called assets. When they are used up, their costs are reported as expenses) equipment(same as supplies) buildings land patents, copy rights Liability Accounts accounts payable note payable unearned revenue : a liability that is settled in the future when a company delivers its products or services. When customers pay in advance for products or services (before revenue is earned), the revenue recognition principle requires that seller consider this payment unearned revenue. Accrued liability: wage payable, taxes payable, interest payable. Loans Equity Accounts= Common Stock – Dividend + Revenue – Expense Revenue: sales, commissions earned (anything earned), interest revenue Expense: utility bill, legal cost, salary costs Transaction analysis Owner invested cash for money A(+) SE(+) L(NC) Note: from owner’s perspective, the cash decreases, but we are doing accounting for the corporation. The owner invested money into the company and the company’s cash should increase Order art supplies A(NC) SE(NC) L(NC) Note: just order it, and the transaction doesn’t happen. It had no impact on accounting equation. Collects cash on receivable from 7(7: provides service on credit) A(+ - ) Note: credit can be account receivable or account payable Paid cash for transaction 3(3: bought office supply on credit) A(-) L(-) capital stock = common stock(equity) Incurring legal cost on credit A(NC), SE(-), L (+) Received (but did not pay) the telephone bill A(NC), SE(-),L(+) Provides service on credit A(+), L(NC),SE(+) Accounts Receivable VS Unearned Revenue
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