A company purchased a new cash register in exchange for a cash payment of $1,200. The __________ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occured. The journal entry on the books of the vendor is: The customer will record the signing of the note as follows: Notes payable can be issued to independent contractors for performing services. Which groups have claims to a business's assets? Enter your name and email in the form below and download the free template now! then you must include on every physical page the following attribution: If you are redistributing all or part of this book in a digital format, Entry 2: Word about the business, which will be opening soon, spreads throughout the community, and Jareds Construction Corner grabs the attention of some commercial construction crews. In case of Cash Purchases, the journal entry is shown as follows: Debit Purchases Which of the following transactions increase total assets and liabilities by $4,000 (Check all that apply), Purchasing $5,000 of equipment by paying $1,000 cash and promising to pay the remaining $4,000 next month 1. The logic behind a journal entry is to record every business transaction in at least two places (known as double entry accounting). All other trademarks and copyrights are the property of their respective owners. - Definition and Use to Categorize Transactions, Ledgers and Chart of Accounts: Definitions and Use, Understanding Debits and Credits in Accounting, Recording Business Transactions in Accounting, Using the Accounting Equation: Analyzing Business Transactions, Journal Entries and Trial Balance in Accounting, What Are Capital Resources? total assets are too low. The asset is debited for the amount paid plus the amount owed. Mark has a doctorate from Drew University and teaches accounting classes. The same entry (with the corresponding amount) is made for each period. To record the depreciation expense of a forklift purchased in January, 1. Note payable (due in 5 years) Prepare an unadjusted trial balance A compound journal entry is one that includes more than two lines of entries. This gives the company more time to make good on outstanding debt and gives the supplier an incentive for delaying payment. Introduction to Finance, Accounting, Modeling and Valuation, Accounting 101: What You Need to Know for a Successful Business, Accounting 101: What You Need to Know For a Successful Business, Finance vs Accounting: An Art and a Science, Ace Your Interview With These 21 Accounting Interview Questions. This book uses the When a company receives an invoice for goods purchased and received from a supplier, it records _______________. List of Excel Shortcuts Notes payable can be issued to acquire property. In the following month, the same calculation will be made, but the principal balance outstanding will be reduced by one thousand dollars to reflect the principal payment. When a business issues common stock, what does it give to its owners? You will also _________ refers to a company's ability to pay liabilities as they come due in the short run. In this case, we can make the journal entry for issuing the $10,000 interest-bearing note on July 1, 2021, by debiting the merchandise inventory with this $10,000 together with the credit of the same amount to the notes payable account as below: In this journal entry of issuing the $10,000 promissory note, both total assets and total liabilities on the balance sheet increase by the same amount of $10,000 as of July 1, 2021. WebThe journal entry is shown as follows: Debit Account Payables Credit Cash / Bank Credit Discount The difference in both the accounts is subsequently shown as a trade discount, and the remainder is subsequently credited from the bank (the amount actually paid). Acme then bought $100 of supplies on account and paid $700 of the amount that is owed for supplies purchased on account last month. What would you do if you found your school in this situation? This field is indented if it is for the account being credited. Short-Term Notes Payable decreases (a debit) for the principal amount of the loan ($150,000). _________ financing is obtained from creditors and ___________ financing is obtained from owners. (4) Investing Activities. Financial reporting is the act of presenting a companys financial statements to management, investors, the government, and other users to help them make better financial decisions. Z Company bought land 20 years ago for $30,000. Cash decreases (credit) for the amount owed, less the discount. Journal entries and attached documentation should be retained for a number of years, at least until there is no longer a need to have the financial statements of a business audited. Current liabilities As a result of recording the purchase. To record the purchase of Computer 2022-1 added to inventory. (2) Financing Activities X Company reported its inventory at its current market value, which is lower than its original cost, Liabilities that will be paid or fulfilled within 12 months are ______ liabilities. CR Cash 10,000. Entry 9: Even though Jared is doing very well with general contractors, he wants to encourage more business from homeowners. This website helped me pass! The remaining balance of the note payable is classified as a long-term liability. Company X issued $10,000 of common stock to its owners for cash. Which of these would be captured and reported by an accounting system? In this way, you have a concrete description of which assets you reduced and which assets you acquired, as well as the accounts impacted by the transaction. Interest Expense is found from our earlier equation, where Interest = Principal Annual interest rate Part of year ($12,000 10% [2/12]), which is $200. Burrows' journal entry to record this transaction will include a debit to: Show the order in which these asset accounts would appear on a company's balance sheet. As an Amazon Associate we earn from qualifying purchases. To record the payment of a bank loan and interest. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Which accounts are affected by the transaction, For each account, determine if it is increased or decreased, For each account, determine how much it is changed, Make sure that the accounting equation stays in balance, The accounts affected are cash (asset) and bank loan payable (liability). The expansion will cost US$75,000, and Jared agrees to pay US$1,500 every month on the loan. Creative Commons Attribution-NonCommercial-ShareAlike License is where the effect of each transaction is recorded chronologically Each one costs them US$300 for a total of US$3,000. The interest expense would have been previously recorded through the accrual accounting process monthly. Its like a teacher waved a magic wand and did the work for me. The entry to record this transaction would include a ___________ to Cash. In this case, we can make the journal entry for the accrued interest on the notes payable by debiting the interest expense account and crediting the interest payable account at the period-end adjusting entry. Therefore, the journal entry would look like this: DR Cash 300,000 CR Bank Loan Payable 300,000 Example 2 Purchasing equipment journal entry Purchased Purchasing $4,000 of equipment on account. For example, if a business purchases three new computers for employees, they may analyze the transaction in this way: Purchased three PCs using cash and then added to our inventory.. The beginning balance in Lucre's Cash account was $1,200. The cash is debited at the acquisition of the note and the installment note payable is credited. 283 lessons. For the first journal entry, you would debit your cash account in the amount of the loan: $50,000, since your cash increases once the loan has been received. When a company purchases an asset but only pays for a portion of it and owes the remainder, which of the following is true? The company may include this as an asset on its balance sheet. To determine the final monetary value of accounts listed on the financial statements on the companys year-end, multiple journal entries are recorded and tracked in an account called a T-account, which is a visual representation of a general ledger account. Our mission is to improve educational access and learning for everyone. Which of the following are considered business documents? Accounts Payable decreases (debit) and Short-Term Notes Payable increases (credit) for the original amount owed of $12,000. Entry 3: Jareds Construction Corner opens for its first day of official business. Notes Payable. The cost of the three pallets was US$500, and they cost JCC US$300 to acquire. d. The federal government sends a Social Security check to your grandmother. Another similar scenario is the assumption of a loan payment to take possession of property. By accident, Z Best recorded the transaction by increasing cash and decreasing stockholders' equity. Journal entries are also helpful in organizing accounts payable, accounts receivable, and expenses in connection with inventory. This makes it easier to identify financial transactions according to the month, year, or fiscal period in which they occurred. Depreciation refers to the loss in value of an asset as time goes by. As a result of the error,: total liabilities are too low Transactions are recorded chronologically showing the accounts debited along with the corresponding accounts credited. WebThis journal entry of accrued interest on note payable will increase total expenses on the income statement and total liabilities on the balance sheet by the same amount of $500 as He pays US$15,000.00 for 15,000 shares at US$1 per share of common stock. WebThe journal entry to record the purchase of this land for cash would be: Recording Building When a business buys a building, its cost includes: the purchase price, repair and remodeling costs, unpaid taxes assumed by the purchaser, legal costs, and real estate commissions paid. does not provide account balances, When a company pays for amounts purchased on account, the entry includes __________. Note payable is the promissory note that we issue to the other party in exchange for the cash or other assets by promising that we will pay certain amount of money at the certain date stated in the note. What is Net Income and Why is it Important? then you must include on every digital page view the following attribution: Use the information below to generate a citation. Of course, if the interest-bearing note payable is a type of short-term note which ends during the accounting period, we can record the interest expense when we make the interest payment. Squid Roe, Inc., purchased equipment that cost $20,000 by promising to pay $15,000 next month and paying the remainder in cash. The journal entry to record the issuance of the note is: Since the note will mature in one-year, it is recorded as a short-term liability on the classified balance sheet. They have to record the fixed assets on the balance sheet. Some key characteristics of this written promise to pay (see Figure 12.12) include an established date for repayment, a specific payable amount, interest terms, and the possibility of debt resale to another party. Entry 12: Another kind of journal entry is an accrued expense. Finally, just like how the size of the forces on the first object must equal that of the second object, the debits and credits of every journal entry must be equal. However, there needs to be an additional account that changes (i.e., the equal and opposite reaction). In this case, we can make the journal entry for this $1,000 interest-bearing note payable on January 1 and June 31 as below: Payment of the note with interest on June 31: Journal Entry for Food Expenses paid by Company. A business may choose this path when it does not have enough cash on hand to finance a capital expenditure immediately but does not need long-term financing. When Sierra pays cash for the full amount due, including interest, on October 31, the following entry occurs. Journal entries are a fundamental aspect of accounting because they track money that is coming and going. The bank will examine your company's creditworthiness, collateral, ability to make loan payments, and other factors before agreeing to lend it money. The journal entry will be as follows: Interest Expense $800. Analyzing each transaction is similar to creating a brief narrative about the impact of the transaction on the company. As a result, the company's asset Cash must be increased by $5,000 and its liability Notes Payable must be increased by $5,000. However, notes payable can also be issued in conjunction with the acquisition of assets such as property and equipment, inventory or services. On the other hand, it should be classified as a long-term liability if its term is more than 12 months. citation tool such as, Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, Book title: Principles of Accounting, Volume 1: Financial Accounting. Like all new companies, yours is struggling with cash flow. Record a journal entry Jared could use this data in the future while analyzing his profit margins, as well as other factors impacted by the cost of goods sold. A short-term note is classified as a current liability because it is wholly honored within a companys operating period. If you are redistributing all or part of this book in a print format, With inaccurate entries, companies may be perceived to be possessing more debt or less debt or as more profitable or less profitable than they actually are. Also, accounting entries are often organized according to an accounting cycle or accounting period. This is posted to the Equipment T-account on the debit side. Accrued interest is the interest gained on outstanding debts over a particular financial period. They need to purchase replacement inventory quickly, and the company decides to use a combination of cash and credit. In either case, there wont be any interest to be recorded at the time of issuing the interest-bearing note. (4) Investing activities 2019 MINI COOPER S COUNTRYMAN SIGNATURE in Edmond, OK Mini Cooper Countryman Features and Specs. In the note, we promise to pay the $10,000 which is the face value of the note with the interest of 10% per annum on January 1, 2022. Inc. issued $1,000,000 of common stock for cash. Entry 8: JCC has to make a payment on the loan he took out for the warehouse improvements. : one asset is exchanged for another General Motors builds a new auto factory in North Carolina. I highly recommend you use this site! Since Sierra paid the full amount due, Short-Term Notes Payable decreases (debit) for the principal amount of the debt. As a result, this could lead companies and investors to make decisions based on false, misleading information, leading to negative ramifications. In this case, the asset reduced was cash, the assets acquired were computers, and the accounts impacted were cash and inventory. (1) Issuing a note payable. Entry 4: JCC then sells three pallets of concrete mix to a contractor. Suppose your company retains an attorney to prepare and file the corporate charter and articles of incorporation for your company. Directlabor:Directmaterial:$116,745($18.10perhour)$30,660($7.30perpound). In this $10,000 promissory note, we promise to pay back this amount with a 10% annual interest on June 30. If youre purchasing a $1,000 piece of equipment, the journal entry looks and works in roughly the same way. When Sierra pays in full on December 31, the following entry occurs. One asset account increases and one stockholders' equity account increases. 1 / 89. (Select all that apply), credit to Accounts Payable of $15,000 You can include as much detail as youd like. Events that do not involve exchanges between the company and someone else but affect assets, liabilities and/or stockholders' equity are called _______________ events. About This Article Debt sale to a third party is a possibility with any loan, which includes a short-term note payable. Air France buys a plane from Boeing, the U.S. aircraft manufacturer. Want to cite, share, or modify this book? To illustrate, lets revisit Sierra Sports purchase of soccer equipment on August 1. An accrued interest journal entry is a method of recording the amount of interest on a loan that has already occurred but is yet to be paid by the borrower and yet to be received by the lender. He decides to pay for them using the same combination of cash and credit that he used with the other compressors he bought: US$1,000 with cash and the rest, US$4,000, with credit. Although many companies use accounting software nowadays to book journal entries, journals were the predominant method of booking entries in the past. Which of the following are true about Notes Payable and Accounts Payable? Current assets divided by current liabilities is the _______ ratio, On May 1, Lord of the Fries, Inc. hires an employee to begin work next month. Having the skills to record and understand journal entries is essential in any career in accounting, whether you are involved in public practice and are working on a clients audit file, or you are working in an industry and helping to prepare a companys financial statements. An asset increases by $100, The line item, Common Stock, on the balance sheet results from a(n) ______________ activity. We just need to record the face value of the interest-bearing note payable in the journal entry at the time of issuing the promissory note to recognize our liability on the balance sheet. 1. This data can be very useful, especially because it may reveal that the cost of goods sold in this situation was a little bit too high. The Mortgage Payable account is increased with an entry on the ______ right side of the T-account. The journal entry to record the purchase of land for $30,000 cash includes _______________. Credit terms were 2/10, n/30, invoice date August 1. For example, some car dealers are willing to sell automobiles with no down payment if they are carrying too much inventory. What is a Balance Sheet? Each compressor costs US$250 for the business, and he can sell them for the same amount he was charging for the compressors from the previous supplier. Download the free Excel template now to advance your finance knowledge! This means the forklift depreciates in value US$1,000 every year. WebJournal entry for purchasing equipment with note payable. A journal entry is when you make a record of a transaction that happens in connection with your personal or business accounts. 2. Even though there were three different items sold, they will all get recorded in the same journal entry specifically because they occurred as part of the same transaction. Accounts Payable Conversion. Entry 10: JCC has more sales totaling US$5,500, and the cost of goods sold was US$5,100. company's current assets are larger than its current liabilities. a. Journalize the companys purchase of merchandise inventory To record a dividend payment made in December, 1. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus, Fundamentals of Financial Management, Concise Edition. (credit: Business Paperwork Deal by rawpixel/Pixabay, CC0), loan calculator with definitions and additional information and tools, Creative Commons Attribution-NonCommercial-ShareAlike License, https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters, https://openstax.org/books/principles-financial-accounting/pages/12-4-prepare-journal-entries-to-record-short-term-notes-payable, Creative Commons Attribution 4.0 International License. combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account. Noodlecake signs a contract with an independent developer for program code for a game app which will not be received until two months from the signing the contract. We can make the journal entry for purchasing equipment with note payable by debiting the equipment account as a fixed asset on our balance sheet and crediting the notes payable account as a liability that we owe to In this case, we can make the journal entry for the $10,000 purchase of equipment with the note payable by debiting this amount to the equipment account and crediting the same amount to the notes payable account on January 1, as below: This journal entry of issuing the note payable to purchase the equipment will increase both total assets and total liabilities on the balance sheet by $10,000 as of January 1. An adjusting entry is used at month-end to alter the financial statements to bring them into compliance with the relevant accounting framework, such as Generally Accepted Accounting Principles or International Financial Reporting Standards. Sometimes, we may issue an interest-bearing note to purchase the goods from our supplies or to borrow money from the creditor. Transaction analysis is a process that determines whether a particular business event has an economic effect on the assets, liabilities or equity of the business. It paid $100 and promised to pay the remainder next month. WebJournal Entries for Notes Payable Lets discuss the various instances of notes payable with examples in each of the following circumstances: Issued Notes Payable for cash If Ram Inc Likewise, we may issue the note payable to purchase equipment from our vendor. Aqua, Inc. purchased the following assets during the first quarter of 2018: Asset A: land at a price of $10 million, half of which is required to be paid right away and the rest is to be paid after 1-year subject to a 10% interest rate. Short-term debt may be preferred over long-term debt when the entity does not want to devote resources to pay interest over an extended period of time. The interest expense is a type of expense that occurs through the passage of time. So, whenever a transaction occurs within a company, there must be at least two accounts affected in opposite ways. 1. The Accounts Payable ending balance equals a ______________ balance. The general journal, also known as the journal, ______. Current assets 1. According to appraisals, the land had a fair value of $75,000 and the building had a fair value of $45,000. The ending balance in Acme's Accounts Payable was a credit of: Complete the accounting equation: Assets = __________ + Stockholders' Equity. It begins at the start of an accounting period and continues throughout the period. Enrolling in a course lets you earn progress by passing quizzes and exams. For some businesses, no, but for others it is an essential entry in their accounting journal for accounting, operational analysis, and tax reporting purposes. At the later date, we can eliminate this amount of note payable when we honor the promissory note that we have issued for purchasing the equipment by paying the promised amount to the vendor. (1) After the fair value adjustment is made, prepare the assets section of Reggit Companys December 31 classified balance sheet. To that end, we have published many more additional resources you will find helpful: A free, comprehensive best practices guide to advance your financial modeling skills, Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). lessons in math, English, science, history, and more. copyright 2003-2023 Study.com. How to Calculate the Funded Status of a Pension Plan, Interest Expense Formula | How to Calculate Interest Expense, Issuing Premium & Discount Bonds | Process, Advantages & Disadvantages, Journal Entry for Perpetual Inventory System | Types, Steps & Examples, Disclosure Requirements for Cash Flow Statements. Would you issue more debt? (Check all that apply.). Show the effect of recording the borrowing of $10,000 from a bank on the accounting equation, _____________ by $10,000. The concept of accounts payable and notes payable are For example, the journal entry to record payroll usually contains many lines, since it involves the recordation of numerous tax liabilities and payroll deductions. succeed. In this case, we can make the journal entry for the interest expense on the note payable when we make the interest payment on the note, by debiting the interest expense account and crediting the cash account directly. Sierra Sports purchased $12,000 of soccer equipment from a supplier on credit. He will be paying US$5,000 total. We can make the journal entry for interest-bearing note payable by debiting the asset account and crediting the notes payable account on the day that we issue the note. He hires a new customer service representative at a rate of US$700 per week. Whether youre learning about accounting for work or about to go on your first accounting interview, youll want to get familiar with journal entries and how they work. The increase in the Common Stock account would be recorded with a: Which of the following are possible effects on the accounting equation when recording a transaction that increases a liability by $100? (Check all that apply), Company has the ability to pay its current liabilities Immediately after Thanksgiving, JCC sells out of a few key items. credit to Cash of $5,000, A current ratio that equals 2.0 suggests that a _________. For example, when you generate a sale for cash, this increases both the revenue account and the cash account. - Definition, Types & Examples, Accounting for Notes Issued: Cash, Rights, Property, Goods & Services, Preparing Financial Statements: Help and Review, Internal Controls in Accounting: Help and Review, Merchandising Operations and Inventory in Accounting: Help and Review, Current and Long-Term Liabilities in Accounting: Help and Review, Adjusting Accounts & Preparing Financial Statements: Help and Review, Public Speaking Syllabus Resource & Lesson Plans, Quantitative Analysis Syllabus Resource & Lesson Plans, Principles of Marketing Syllabus Resource & Lesson Plans, Human Resource Management Syllabus Resource & Lesson Plans, UExcel Human Resource Management: Study Guide & Test Prep, UExcel Principles of Marketing: Study Guide & Test Prep, Business Math Curriculum Resource & Lesson Plans, Principles of Microeconomics Syllabus Resource & Lesson Plans, Participating Preferred Stock: Definition & Example, Long-Term Investments: Definition, Types & Examples, Earnings Yield: Definition, Formula & Calculation, Reconciliation in Accounting: Definition & Examples, Total Asset Turnover: Definition, Formula & Analysis, Articles of Incorporation: Definition & Examples, Allowance of Doubtful Accounts Journal Entry, What is a Custodial Account? The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo (2) Is the unrealized gain (or loss) on the portfolio of available-for-sale securities reported on the income statement? Cash is increasing because the company is gaining cash from the bank, and bank loan payable is increasing because the company is increasing its liability to pay back the bank at a later date. To record the purchase of store supplies. List these liability accounts in the same order in which they would appear on a company's balance sheet from top to bottom. The following entry occurs when Sierra initially takes out the loan. Although recording journal entries can be very monotonous and repetitive, recording accurate entries at the right time is imperative for companies to show their correct financial status to not only people within the firm but also to external users. We paid half last year and (Check all that apply), A promise to pay is given Example. We can make the journal entry for purchasing equipment with note payable by debiting the equipment account as a fixed asset on our balance sheet and crediting the notes payable account as a liability that we owe to the vendor. Also, because every journal entry includes a date, Jared can compare the cost of goods sold in two different time periods using this information and determine if theyve gotten any better when it comes to running a lean, efficient business. Sierra does not have enough cash on hand currently to pay for the machine, but the company does not need long-term financing. For example, should you record if an employee spends US$50 in fuel as they travel to meet with a potential new client? Cash is given, The names given to the items exchanged in transactions based on a company's chart of accounts. Which of the following is true. are licensed under a, Prepare Journal Entries to Record Short-Term Notes Payable, Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting, Identify Users of Accounting Information and How They Apply Information, Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities, Explain Why Accounting Is Important to Business Stakeholders, Describe the Varied Career Paths Open to Individuals with an Accounting Education, Describe the Income Statement, Statement of Owners Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate, Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses, Prepare an Income Statement, Statement of Owners Equity, and Balance Sheet, Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements, Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions, Define and Describe the Initial Steps in the Accounting Cycle, Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements, Use Journal Entries to Record Transactions and Post to T-Accounts, Explain the Concepts and Guidelines Affecting Adjusting Entries, Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries, Record and Post the Common Types of Adjusting Entries, Use the Ledger Balances to Prepare an Adjusted Trial Balance, Prepare Financial Statements Using the Adjusted Trial Balance, Describe and Prepare Closing Entries for a Business, Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity, Appendix: Complete a Comprehensive Accounting Cycle for a Business, Compare and Contrast Merchandising versus Service Activities and Transactions, Compare and Contrast Perpetual versus Periodic Inventory Systems, Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System, Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System, Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods, Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies, Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System, Define and Describe the Components of an Accounting Information System, Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders, Analyze and Journalize Transactions Using Special Journals, Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems, Analyze Fraud in the Accounting Workplace, Define and Explain Internal Controls and Their Purpose within an Organization, Describe Internal Controls within an Organization, Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries, Discuss Management Responsibilities for Maintaining Internal Controls within an Organization, Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries, Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements, Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions, Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches, Determine the Efficiency of Receivables Management Using Financial Ratios, Discuss the Role of Accounting for Receivables in Earnings Management, Apply Revenue Recognition Principles to Long-Term Projects, Explain How Notes Receivable and Accounts Receivable Differ, Appendix: Comprehensive Example of Bad Debt Estimation, Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions, Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method, Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method, Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet, Examine the Efficiency of Inventory Management Using Financial Ratios, Distinguish between Tangible and Intangible Assets, Analyze and Classify Capitalized Costs versus Expenses, Explain and Apply Depreciation Methods to Allocate Capitalized Costs, Describe Accounting for Intangible Assets and Record Related Transactions, Describe Some Special Issues in Accounting for Long-Term Assets, Identify and Describe Current Liabilities, Analyze, Journalize, and Report Current Liabilities, Define and Apply Accounting Treatment for Contingent Liabilities, Record Transactions Incurred in Preparing Payroll, Explain the Pricing of Long-Term Liabilities, Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method, Prepare Journal Entries to Reflect the Life Cycle of Bonds, Appendix: Special Topics Related to Long-Term Liabilities, Explain the Process of Securing Equity Financing through the Issuance of Stock, Analyze and Record Transactions for the Issuance and Repurchase of Stock, Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits, Compare and Contrast Owners Equity versus Retained Earnings, Discuss the Applicability of Earnings per Share as a Method to Measure Performance, Describe the Advantages and Disadvantages of Organizing as a Partnership, Describe How a Partnership Is Created, Including the Associated Journal Entries, Compute and Allocate Partners Share of Income and Loss, Prepare Journal Entries to Record the Admission and Withdrawal of a Partner, Discuss and Record Entries for the Dissolution of a Partnership, Explain the Purpose of the Statement of Cash Flows, Differentiate between Operating, Investing, and Financing Activities, Prepare the Statement of Cash Flows Using the Indirect Method, Prepare the Completed Statement of Cash Flows Using the Indirect Method, Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency, Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method, Short-Term Promissory Note.
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