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UGBA M3L5 - UGBA M3L5 In accrual accounting when do we make...

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UGBA M3L5 In accrual accounting, when do we make the bookkeeping entry for a sale? When the goods change hands Your firm adds another salesperson. Where does the salary show up? GS&A on the Income Statement- general selling and administrative expense Financial Accounting II Double Entry Bookkeeping Fundamental Accounting Balance Sheet How much is our simple t-shirts business worth? We paid $90 for the screens last year We begin this month with $1,200 Buy 100 t-shirts for $9 $900 Cash we have left: $300 Is our “firm” only worth $300? No. We still have $900 inventory. At the beginning of the month: We paid $90 for the screens last year We begin this month with $1,200 cash Value of our firm is $1,200 Later on in the month: We paid $90 for the screens last year We now have $ 300 cash and Inventory of $ 900 Value of our firm is still $1,200 Double Entry Bookkeeping- keeps the books “in balance” shows good record keeping; 2 entries for each transactions; import wool from England, export silk A system in which each transaction results in two entries A system of debits and credits in which the Accounting Equation must always remain in balance Example: We have $1,200 in Cash, and buy 100 t-shirts at $9each Cash goes down by $900 … (The two entries) Inventory goes up by $900 (“Inventory” is an account)
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