Review for AC202

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Unformatted text preview: e Accounts Service Revenue 5000 Interest Earned 50 Income Summary To close revenue accounts Service Interest Revenue Earned 5050 5,000 Bal 5000 50 Income Summary Bal 50 5,050 195 Income Summary Dec 31 5050 196 Ledger Accounts Service Interest Insurance Revenue Earned Expense 5000 5000 50 50 Bal 70 Bal 0 Bal 0 Utility Exp Wages Exp Interest Exp Bal 115 Bal 550 Bal 15 197 Journal Entry to Close Expense Accounts Income Summary Interest Expense Wages Expense Utility Expense Insurance Expense To close expense accounts Insurance Utility Exp Bal 115 Wages Exp 115 Bal 550 550 750 15 550 115 70 Interest expense Expense Bal 70 70 Bal 15 15 Income Summary 750 5,050 198 Income Summary Dec 31 750 Dec 31 5050 199 Ledger Accounts Service Interest Revenue Earned Expense 5000 5000 50 Bal 0 Utility Exp 115 Bal 0 115 50 Bal 0 Wages Exp 550 Bal 0 550 Insurance 70 70 Bal 0 Interest Exp 15 Bal 0 15 200 Income Summary Dec 31 750 Dec 31 5050 Income Summary 4300 Retained Earnings 4300 To close income summary account 201 Journal Entry to Close Income Summary Income Summary 4300 Retained Earnings 4300 To close income summary account 202 Closing Accounts Income Summary 750 4300 5050 Bal 5050 Retained Earnings 2200 Bal 4300 Dividends 100 Bal 0 203 Journal Entry to Close Dividend Account Retained Earnings 100 Dividends 100 To close dividend account 204 Closing Accounts Income Summary 750 4300 5050 Tot 5050 Bal 0 Retained Earnings 100 2200 4300 6500 Bal 6400 Dividends 100 100 Bal 0 205 What if you had a net loss? 4 8 8 What if you had a net loss? 8 10 (3) 10,740 (3) 140 10,740 140 Bal 2,220 REVIEWING REVIEWING FINANCIAL STATEMENTS Forms of Business Forms of Business Organization Sole proprietorship Partnership Corporation Sole Proprietorship Sole Proprietorship Business owned by one person ADVANTAGES Simple to establish Owner controlled Tax advantages DISADVANTAGES Owner personally liable Financing difficult Partnership Partnership Two or more owners ADVANTAGES Simple to establish Shared control Broader skills & resources Tax advantages DISADVANTAGES Personal liability Corporation Corporation Separate legal entity Separate legal entity owned by stockholders ADVANTAGES Easy to transfer ownership Greater capital raising potential Lower legal liability DISADVANTAGES Unfavorable tax treatment Corporate Form of Organization An entity An entity created by law created by law Existence is Existence is separate from separate from owners owners Has rights and Has rights and privileges privileges Ownership can be Privately Held Privately Publicly Held Which form to choose depends on needs, tax consequences, and legal liability. Sole Sole Proprietorship Proprietorship Partnership Partnership Corporation Corporation A corporation can be public or private Users of Accounting Information Internal Users •Managers •Company Officers •Internal Auditors •Production supervisors •Budget Officers •Finance Directors Users of Accounting Information External Users •Lenders •Consumer Groups •Shareholders •External Auditors •Governments •Customers Types of Business Activity Types of Business Activity Financing Investing Operating Financing Activities Financing Activities B...
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This note was uploaded on 09/29/2013 for the course AC 202 taught by Professor Nancyeverett during the Fall '09 term at Park.

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