BMGT310 - Class Notes

BMGT310 - Class Notes - jBMGT310 – Intermediate...

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Unformatted text preview: jBMGT310 – Intermediate Accounting I Dr. Stephen Brown Office: VMH 4333Q Office Hours: M/W: 5-6, T: 10-11 Phone: (301) 405-0570 [email protected] Lecture 2 – Wednesday, September 01, 2010 – Chapter 3: The Accounting Information System • Fundamental Accounting Equation: Assets = Liabilities + Owner’s Equity o Liabilities: Accounts Payable, Loans Payable, Notes Payable, Unearned Revenue, Accrued Liabilities o Owner’s Equity: Common Stock, Capital, Retained Earnings, Additional Paid-in Capital • Perpetual vs. Periodic Inventory System • Debits and Credits o Double-Entry accounting system (two-sided effect) o Recording done by debiting at least one account and crediting another o Debits must equal Credits • T-Accounts o An Account shows the effect of transactions on a given asset, liability, equity, revenue, or expense account o If Debit entries are greater than Credit entries, the account will have a debit balance o If Credit entries are greater than Debit entries, the account will have a credit balance • Debit Summary o A Debit is an asset or an expense o D ebit E xpense A sset D ividend ( DEAD) • Debits and Credits Summary o A debit is an increase in an asset or expense o A credit is an increase in a liability or revenue o A credit is a decrease in an asset or expense o A debit is a decrease in a liability or revenue o A credit is an increase in a contra-asset (or negative-expense) Accumulated Depreciation Allowance for Bad Debt Allowance for Obsolete Inventory o A debit is an increase in a contra-liability (or negative revenue) • Ownership Structure : Dictates the types of accounts that are part of the equity section o Proprietorship or Partnership: Capital Account, Drawing Account o Corporation: Common Stock, Additional Paid-In Capital, Dividends Declared, Retained Earnings • The Accounting Cycle o Transactions 1) Journaling 2) Posting 3) Trial Balance 4) Adjustments 5) Adjusted Trial Balance 6) Financial Statements 7) Closing Entries 8) Post-Closing Trial Balance 9) Reversing Entries • Transactions and Events o What to Record? FASB states, “transactions and other events and circumstances that affect a business enterprise” o Types of Events External: Between a business and its environment Internal: Event occurring entirely within a business • Journaling o General Journal: A chronological record of transactions Journal entries are recorded in the journal Lecture 3 – Wednesday September 8, 2010 – Chapter 3: The Accounting Information System • Closing the T-Accounts Cash 5,000 7,000 3,200 500 2,800 (11,900) 15,200 15,200 11,900 • Adjusting Entries o Revenues: Recorded in the period in which they are earned o Expenses: Recognized in the period in which they were earned o Adjusting entries - needed to ensure that the revenue recognition and matching principles are followed....
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BMGT310 - Class Notes - jBMGT310 – Intermediate...

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