1 / 71

Review of the Accounting Process

arin
Download Presentation

Review of the Accounting Process

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. Review of the Accounting Process CHAPTER 2

    2. The Accounting Equation

    3. Accounting Equation for a Corporation

    4. Account Relationships

    6. Accounting Processing Cycle On January 1, 2000, CWC, Inc. borrows $10,000 from the bank. Two accounts are affected: Cash (an asset) is increased by $10,000. Notes Payable (a liability) is increased by $10,000.

    7. Accounting Processing Cycle Two accounts are affected: Cash (an asset) is increased by $10,000. Notes Payable (a liability) is increased by $10,000.

    8. Accounting Processing Cycle Two accounts are affected: Cash (an asset) is increased by $10,000. Notes Payable (a liability) is increased by $10,000.

    9. General Ledger

    10. On December 1, 2000, Terry Dow invested $30,000 in his new business, Clear Copy, Inc. Posting Journal Entries

    11. Posting Journal Entries

    12. Posting Journal Entries

    13. Posting Journal Entries

    14. Posting Journal Entries

    15. Posting Journal Entries

    16. Posting Journal Entries

    17. Posting Journal Entries

    18. Posting Journal Entries

    20. Adjusting Entries At the end of the period, some transactions or events remain unrecorded. Because of this, several accounts in the ledger need adjustments before their balances appear in the financial statements.

    22. Prepaid Expenses

    23. Prepaid Expenses On December 1, 2000, Scott Company paid $12,000 to cover rent for December 2000 through May 2001. Let’s look at the adjusting journal entry needed on December 31, 2000.

    24. On December 1, 2000, Scott Company paid $12,000 to cover rent for December 2000 through May 2001. Let’s look at the adjusting journal entry needed on December 31, 2000. Prepaid Expenses

    25. After posting, the accounts look like this: Prepaid Expenses

    26. Depreciation is the process of computing expense by allocating the cost of plant and equipment over their expected useful lives. Depreciation

    27. On January 1, 2000, Monroe, Inc. purchased the following oil pumping equipment: Let’s record depreciation expense for the year ended December 31, 2000. Depreciation

    28. Depreciation

    29. Depreciation

    30. After posting, the accounts look like this: Depreciation

    31. Depreciation

    32. Unearned Revenue

    33. On December 1, 2000, Ox University sold 1,000 seasons tickets to its 20 home basketball games for $100 each. OxU makes the following entry: Unearned Revenue

    34. By December 31, OxU has played 8 of its regular home games, winning 6 and losing 2. Unearned Revenue

    35. By December 31, OxU has played 8 of its regular home games, winning 6 and losing 2. Unearned Revenue

    36. Unearned Revenue

    37. Accrued Liabilities

    38. Accrued Liabilities

    39. Accrued Liabilities

    40. Accrued Liabilities

    41. Accrued Receivables

    42. At year-end, Smith & Jones, CPAs, had completed $31,200 of work but had not yet billed the clients. Prepare the adjusting entry for December 31, 2000. Accrued Receivables

    43. Accrued Receivables At year-end, Smith & Jones, CPAs, had completed $31,200 of work but had not yet billed the clients. Prepare the adjusting entry for December 31, 2000.

    44. Accrued Receivables

    45. Estimates Uncollectible accounts and depreciation of fixed assets are estimated. An estimated item is a function of future events and developments.

    46. Estimates

    53. Resets revenue, expense and withdrawal account balances to zero at the end of the period. Helps summarize a period’s revenues and expenses in the Income Summary account. The Closing Process

    54. Temporary and Permanent Accounts

    55. Close Revenue accounts to Income Summary. Close Expense accounts to Income Summary. Close Income Summary account to Retained Earnings. Close Dividends to Retained Earnings. Closing Entries

    57. Close Revenue Accounts to Income Summary

    58. Close Revenue Accounts to Income Summary

    60. Close Expense Accounts to Income Summary

    61. Close Expense Accounts to Income Summary

    63. Close Income Summary to Retained Earnings

    64. Close Income Summary to Retained Earnings

    66. Close Dividends to Retained Earnings

    67. Close Dividends to Retained Earnings

    68. Post-Closing Trial Balance

    69. Conversion From Cash Basis to Accrual Basis Adjusting entries, for the most part, are conversions from cash to accrual. Let’s look at an example.

    70. Conversion From Cash Basis to Accrual Basis Jeter, Inc. paid $20,000 cash for insurance during the current period. On 1/1/00, Prepaid Insurance was $5,000, and on 12/31/00, the account balance was $3,000. Determine Insurance Expense for the year 2000.

    71. Conversion From Cash Basis to Accrual Basis Jeter, Inc. paid $20,000 cash for insurance during the current period. On 1/1/00, Prepaid Insurance was $5,000, and on 12/31/00, the account balance was $3,000.

    72. End of Chapter 2

More Related