Chapter 3 Double Entry Accounting

Chapter 3 Double Entry Accounting - C hapter 3 Double Ent...

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Unformatted text preview: C hapter 3 Double Ent ry Accounting 3.1 T Account and Jou rnal Ent r ies 3.2 Alternative income formats Assets: + debit credit Liabilities: debit – credit + Equity: debit – credit + Accounting for revenues and expenses 1. Create temporary accounts for specific revenues and expenses 2. Adjusting entry: t ransfer and balance from temporary accounts to the income summary account 3. Adjusting entry: t ransfer the balance from income summary to retained earnings Accumulated Amortization is a contra asset: offset or reduction in the primary account Jou rnal Ent r ies: debit first, then credit records T r ial balance: summary of all accounts before any adjusting entries I ncome Statement Format 1. Single Step: a ll revenues are listed together then all expenses are listed t ogether (excluding income tax expense) 2. M ulti Step: details on specific operations are segregated • Income from normal ongoing operations: sales revenue, cogs, gross p rofit/margin, operating expenses, income from normal operations • Income from non operating sources: interest revenue, interest expenses, gains and loses on sale of long term assets 3. I ncome from extraordinary items: i ncome taxes, income from d iscontinued operations, net income. ...
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Chapter 3 Double Entry Accounting - C hapter 3 Double Ent...

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