Intermediate Accounting Notes
Essay by Feng Zheng • February 8, 2017 • Course Note • 2,400 Words (10 Pages) • 907 Views
Assets=claims - liability
- Equity - contributed capital - common stock/ treasury stock
- earned capital - rev/ Exp. / gains/ losses
- Debit
- Contra Assets account
- Current vs non-current (1 yr)
*notes receivable: could be current or non-current cuz there are both principle and interest.
*prepaid: depends on when you get the benefit.
- Credit
- current vs non-current liability
permanent accounts & Nominal accounts
⬇️ ⬇️
bal. sheet inc. stmt.
Example
- Truck purchased at price of $20,000 for $18,000 plus options of 2,500.
- 5 yr life, no savage
- At end of yr 3 , sold for for 9,300
- Record yr 0, yr1, yr 3
Year 0 Dr Assets - Truck 22,500
Cr Cash 20,500
Year 1 Dr Depreciation Expense 4,100
Cr Accumulated Dep 4,100
Year 3 Dr Dep 4,100
Cr Accu. Dep 4,100
Dr Accumulated Dep 12,300
Cr Assets 12,300 Carrying Amount of the truck=8,200 So gain=1,100
Dr Cash 9,300
Cr Gain 1,100
Cr Truck 8,200
Accounting Cycle
- Economic Event takes place
- Analyze the transaction.
- Measurement. ( is law suit an economic event? depends on probability/ability
to assess/ ability to measure)
- Timing
3. Journalization.
Dr
Cr
Explanation.
- Prep
- Approve
- Post
General journal.
Sales journals
Cash receipt journal
Purchases J.
Disbursement J.
4. Posted to Account
General ledger. (contains all the accounts)
-subsidiary ledger (such as account receivable)
AR[pic 1][pic 2]
customer
details
5. Trial Balance
List of all a/c + its balance
A/C # A/C Name DR CR
1001 cash 1000
1101 A/R 10500
…
…
…
X X
Adjustment ❓
- Depreciation (also a kind of deferral)
- Accruals (see if miss some expenses? )
Incurred but not paid
Earned but not received.
- Deferral. (like prepaid.)
EX. Note Payable 8/m on 11/1
@7.2% payable every six month
12/31/XX
Dr interest expense
Cr interest payable
1/1/XX
Dr Interest Payable 12,000
Cr Interest Exp 12,000
5/1/XX
Dr interest Expense 36,000
Cr Cash 36,000
6.produce financial statements
“BIG 4”
7. Close process
1) close all revenue account to income summary
2) close all expense account to income summary
3) close income summary to retained earnings.
income summary ➡️ a nominal account.
Balance of income summary➡️net income
Chapter 24
Footnote Disclosure
FN #1 - Organizational issues.
FN #2 - Summary of Significant Accounting Policies (SOSAP) ex: depreciation method; FIFO or LIFO; Cost of Inventory.
* FIN 48 income tax
* Contingencies.
* Investments.Risk ( risk at how you value them)
- lv 1 traded on the security market. observable
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