First Mid Term Study Guide

First Mid Term Study Guide - BMGT310 Mid Term Study Guide...

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BMGT310 – Mid Term Study Guide Chapter 3 – Accounting Information System 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) 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 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. Chapter 4 – Income Statement Elements of the Income Statement o Gains: Increases in equity (net assets) form peripheral or incidental transactions o Losses: Decreases in equity (net assets) from peripheral or incidental transactions o Gains or losses can result from…
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Sale of investments or plant assets Settlement of liabilities Write-offs of assets Reporting Irregular Items – Done in both Single-Step and Multiple-Step o Discontinued Operations : When a company eliminates the results of operations and cash flows of a component of the enterprise There is no significant continuing involvement in that component.
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