bfound_summary_pt_2

bfound_summary_pt_2 - Retained earnings statement- C...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Retained earnings statement- Classified Balance sheet- a balance sheet that was expanded by adding subsections for current assets; property, plant, and equipment; and current liabilities. When the Debit column of the Balance Sheet columns is more than the Credit column, net income is reported. If the Credit column exceeds the Debit column, a net loss is reported Assets- divided into current assets and fixed assets o Current assets- Cash and other assets that are expected to be converted into cash, sold or used up usually within a year or less, through the normal operations of the business (cash, accounts receivable, supplies) Notes receivable- written promises by the customer to pay the amount of the note and possibly interest at an agreed rate o fixed assets- (property, plant, and equipment)- assets that depreciate over a period of time (land is an exception) land, buildings, office equipment, supply equipment, machinery Liabilities- divided into current liabilities and long-term liabilities o Current liabilities-due within a short period of time (a year or less) and are to be paid out of current assets Interest payable, accounts payable, wages payable, unearned fees o Long-term liabilities- not due for a long time
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Mortgage payable, notes payable, bond payable Stockholders’ equity- stockholders’ right to the assets of the business o Capitol stock and retained earnings Real accounts- accounts that is relatively permanent from year to year Temporary accounts (nominal accounts) - accounts that only report amounts from one time period Closing entries (steps) 1. Revenue account balances are transferred to Income Summary 2. Expense account balances are transferred to Income Summary 3. Balance of Income Statement is transferred to retained earnings statement 4. Balance of dividends account is transferred to retained earnings account After the closing entries are posted, all of the temporary accounts have zero balances
Background image of page 2
Income summary- a temporary account that is only used during the closing process
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Accounting cycle-accounting process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance Steps of accounting process 1. Transactions are analyzed and recorded in the journal a. Determine what accounts are affected (assets, liabilities, etc.) b. Determine whether each is increasing or decreasing c. Determine if they should be debit or credit d. Record them in journal 2. Transactions are posted to the ledger a. Date is entered in date column of the account b. Amount is entered in either debit or credit column c. Journal page number is entered is Posting Reference column d. Account number is entered in Posting Reference column in journal 3. An unadjusted trial balance is prepared a. Make sure the totals are equal to make sure there are no errors
Background image of page 4
4. Adjustment data are assembled and analyzed a. Update accounts b.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 19

bfound_summary_pt_2 - Retained earnings statement- C...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online