The Essence of Accounting

Size: px
Start display at page:

Download "The Essence of Accounting"

Transcription

1 The Essence of Accounting W. Terry Dancer, PH. D. Associate Professor of Accounting Department of Accounting and Law College of Business Arkansas State University Box 550 State University, Arkansas, Home: Work: Fax: December 2006

2 I started teaching accounting almost 30 years ago. When I started teaching, computers were the size of classrooms, hand held calculators cost hundreds of dollars, and a personal trainer was someone who helped you get your shape in shape. Things have certainly changed over 30 years. Computers are now small enough to hold in your hand, calculators can be purchased for under $5, and a personal trainer might be something to help you learn accounting. While some things are going through significant change, some things in accounting remain the same today as they were 30 or even 500 years ago. Assets still equal liabilities plus owner s equity; net income still equals revenues-expenses; and what you own still equals what you started with plus what you added less what you took out. The balance sheet, income statement, and statement of owner s capital have changed very little thru the years. The addition of a fourth financial statement, the statement of cash flow, was not without problems. We went from the statement of where got, where gone to the present day statement of cash flow, but not without quite a bit of debate and change. I thought trying to add a new statement to compliment statements 500 years old was a monumental task, and it proved to be. This educational note is about the essence of accounting. When you begin to explore the essence of anything, you must take an item and break it down into the most fundamental elements possible. I ask my students about the essence of life. After much discussion we usually settle on four elements: Eat right, get lots of exercise, get plenty of rest, and don t smoke. Clearly, there is far more to life then these four elements, but consider what our life would be like if we exercised, ate right, rested properly, and didn t smoke. I am up to three out of four and will work hard to get to four out of four. Then I ask my students about the essence of accounting. If you break down accounting to the most fundamental elements what do you have? After much discussion, we settle on two elements. Accounting is accounts and amounts. Clearly there is much more to accounting than just accounts and amounts, but if students attempting to learn accounting understood accounts and amounts, then perhaps the learning would begin to flow like dominos. Once you break something into its most fundamental elements, then you begin to add to the elements. For example, on the account side, there are two parts. You have classification and presentation. Students quickly learn that this is really the same side of a single coin. Once a student learns cash is an asset, they realize presentation is on the balance sheet. Once they learn unearned revenue is a liability, they realize presentation is on the balance sheet. So on the account side, emphasis is on how the account is classified and where the account is presented in the financial statements. On the amount side, you must deal with methods and calculations. At times a transaction will require no calculations. A payment for rent of $500 goes on the books at the price paid without the necessity to perform any calculations or consider any alternate methods to make calculations. Then consider depreciation expense. Students must consider the various methods available, select an appropriate method, and make calculations based on the method selected.

3 Every chapter of every accounting test ever written lends itself to a fundamental study of accounts and amounts. If students understand the nature of accounts and amounts and how they are used as the building blocks to prepare the financial statements they may be able to more easily grasp the overall nature of accounting and the articulation existing among all the statements. I have prepared accounts and amounts for all chapters. One assignment for each chapter is for the students to make a list of all the accounts presented in the chapter and identify the proper classification and presentation for each account. Then the students are required to consider the amounts for each account and identify the various methods used to determine an appropriate amount and the manner in which calculations are made. The balance of this article deals with accounts and amounts related to current liabilities. I realize accounts may vary from book to book, but I believe the ones listed are representative of many intermediate accounting texts when dealing with current liabilities. At the end you will read some additional notes about the topic. I suppose this is the teacher coming out in me. In this section I attempt to include items of importance not covered in the discussion of accounts and amounts. ACCOUNTING FOR CURRENT LIABILITIES : An obligation whose liquidation will require use of existing current assets or create another current liability. THE ACCOUNTS AND AMOUNTS FOR CURRENT LIABILITIES CLASSIFICATION and PRESENTATION METHODS and CALCULATION NOTES PAYABLE NOTES PAYABLE=FACE AMOUNT OF THE NOTE DISCOUNT ON NOTES PAYABLE (ZERO INTEREST NOTE) CONTRA ACCOUNT TO NOTES PAYABLE : DEDUCTED FROM NOTES PAYABLE DISCOUNT=FACE-PRESENT VALUE OF NOTE CASH DIVIDENDS PAYABLE / DIVIDENDS PAYABLE= (SHARES OUTSTANDING) (DIVIDEND PER SHARE)

4 RETURNABLE CASH DEPOSITS RETURNABLE CASH DEPOSITS=AMOUNTS RECEIVED FROM CUSTOMERS UNEARNED REVENUE UNEARNED REVENUE=AMOUNT OF CASH RECEIVED IN ADVANCE SALES TAX PAYABLE SALES TAX PAYABLE= (SALES) (SALES TAX RATE) NOTE: IF THE TAX IS INCLUDED IN SALES BEFORE CALCULATION SALES TAX PAYABLE= (SALES/1+TAX RATE) (TAX RATE) PROPERTY TAXES PAYABLE PROPERTY TAXES PAYABLE=AMOUNT OF TAX ASSESSMENT INCOME TAXES PAYABLE INCOME TAXES PAYABLE= (TAXABLE INCOME) (TAX RATE) FICA TAXES PAYABLE FICA TAXES PAYABLE= {(RATE) (TAXABLE EARNINGS)} (2) WITHHOLDINGS TAXES PAYABLE WITHHOLDINGS TAXES PAYABLE=AMOUNT HELD FROM EMPLOYEES FEDERAL UNEMPLOYMENT TAXES PAYABLE FEDERAL UNEMPLOYMENT TAXES PAYABLE= (RATE) (TAXABLE EARNINGS)

5 STATE UNEMPLOYMENT TAXES PAYABLE STATE UNEMPLOYMENT TAXES PAYABLE= (RATE) (TAXABLE EARNINGS) VACATION WAGES PAYABLE VACATION WAGES PAYABLE= (WEEKLY VACATION EARNINGS) (WEEKS) PROFIT-SHARING BONUS PAYABLE PROFIT-SHARING BONUS PAYABLE= (COMPANY PROFIT) (SPECIFIED RATE) ESTIMATED LIABILITY UNDER WARRANTY METHODS: EXPENSE WARRANTY APPROACH SALES WARRANTY APPROACH ESTIMATED LIABILITY UNDER WARRANTY (EXPENSE WARRANTY APPROACH) = (UNITS SOLD) (AVERAGE WARRANTY COST PER UNIT. UNEARNED WARRANTY REVENUE (SALES WARRANTY APPROACH) =THE COST OF THE WARRANTY TO THE CUSTOMER. ESTIMATED LIABILITIES FOR PREMIUMS ESTIMATED LIABILITY UNDER PREMIUMS= (ESTIMATED PREMIUMS) (COST) ADDITIONAL ITEMS OF NOTE CURRENT PORTION OF ANY LONG TERM DEBT: CLASSIFIED AS A CURRENT LIABILITY SHORT TERM OBLIGATIONS EXPECTED TO BE REFINANCED: MAY BE EXCLUDED FROM CURRENT LIABILITIES DEPENDING ON INTENT AND ABILITY PREFERRED DIVIDENDS IN ARREARS ARE NOT A Liability CONTINGENCES: GAIN CONTINGENCIES ARE NEVER RECORDED, LOSS CONTINGENCIES ARE RECORDED ONLY IF THEY ARE PROBABLE

6 SUMMARY Students will never learn all they need to know about accounting by just learning accounts and amounts. However, my experience using this teaching method proved a very effective way to get students headed in the right direction. Teaching pension accounting is still quite a challenge, but I truly believe students better understand accounting for pensions using the account and amount method of teaching accounting.

CHAPTER 13 Current Liabilities and Contingencies

CHAPTER 13 Current Liabilities and Contingencies CHAPTER 13 Current Liabilities and Contingencies 13-1 LECTURE OUTLINE This chapter can be covered in two or three class sessions. Students should be familiar with trade and payroll liabilities. Short-term

More information

Chapter Twelve. Current Liabilities. Current Liabilities for Competing Companies

Chapter Twelve. Current Liabilities. Current Liabilities for Competing Companies Chapter Twelve Current Liabilities and Contingencies 1. Define current liabilities & identify common CL 2. Account for accruals 3. Account for deferrals 4. Account for compensated absences 5. How to report

More information

Income Measurement and Profitability Analysis

Income Measurement and Profitability Analysis PROFITABILITY ANALYSIS The following financial statements for Spencer Company will be used to demonstrate the calculation of the various ratios in profitability analysis. Spencer Company Comparative Balance

More information

SOLUTIONS. Learning Goal 15

SOLUTIONS. Learning Goal 15 Learning Goal 15: Prepare a Classified S1 Learning Goal 15 Multiple Choice 1. b 2. c 3. a 4. b 5. d 6. a 7. c Their importance in paying current liabilities is the main reason current assets are shown

More information

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities.

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Accounting Fundamentals Lesson 8 8.0 Liabilities Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Current

More information

Study Guide - Final Exam Accounting I

Study Guide - Final Exam Accounting I Study Guide - Final Exam Accounting I True/False Indicate whether the sentence or statement is true or false. 1. Entries in a sales journal affect account balances in both the accounts receivable ledger

More information

Adjusting and Closing Entries

Adjusting and Closing Entries Adjusting and Closing Entries Adjusting and Closing entries tend to be difficult to grasp at first. A reason for this might be due to the type of transactions requiring adjustment, which tend to be unfamiliar.

More information

Chapter 16 Accounting for Income Taxes

Chapter 16 Accounting for Income Taxes DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES Fundamental Concepts There are fundamental differences in the amount of income and expenses reported for GAAP and income tax purposes. The objective for

More information

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns June 3 2016 North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns Governor McCrory signed into law Session Law 2016-6

More information

Do it! Chapter 11. Current Liabilities

Do it! Chapter 11. Current Liabilities Chapter 11 Do it! You and several classmates are studying for the next accounting examination. They ask you to answer the following questions. 1. If cash is borrowed on a $50,000, 6-month, 12% note on

More information

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18,

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18, CHAPTER 19 Accounting for Income Taxes ASSIGNMENT CLASSIFICATION TABLE Topics 1. Reconcile pretax financial income with taxable income. 2. Identify temporary and permanent differences. 3. Determine deferred

More information

2-8. Identify whether each of the following items increases or decreases cash flow:

2-8. Identify whether each of the following items increases or decreases cash flow: Problems 2-8. Identify whether each of the following items increases or decreases cash flow: Increase in accounts receivable Increase in notes payable Depreciation expense Increase in investments Decrease

More information

Chapter 2 Balance sheets - what a company owns and what it owes

Chapter 2 Balance sheets - what a company owns and what it owes Chapter 2 Balance sheets - what a company owns and what it owes SharePad is packed full of useful financial data. This data holds the key to understanding the financial health and value of any company

More information

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns June 3 2016 North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns Governor McCrory signed into law Session Law 2016-6

More information

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 2005 2006 ASSETS Investments - other than investments in affiliates: Securities available for sale: Fixed maturities, at fair value 3,043,851 3,193,503

More information

CHAPTER 13. Current Liabilities and Contingencies 1, 2, 3, 4, 5, 6, 8. 5. Compensated absences. 13, 14, 15 8 5, 6, 16

CHAPTER 13. Current Liabilities and Contingencies 1, 2, 3, 4, 5, 6, 8. 5. Compensated absences. 13, 14, 15 8 5, 6, 16 CHAPTER 13 Current Liabilities and Contingencies ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Concept of liabilities; definition

More information

This article illustrated deferred tax liabilities for a cash crop farm in west central Indiana. The

This article illustrated deferred tax liabilities for a cash crop farm in west central Indiana. The September 2014 Computation of Deferred Liabilities Michael Langemeier, Associate Director, Center for Commercial Agriculture This article is one of a series of financial management articles that will examine

More information

ENTREPRENEURIAL FINANCE: Strategy Valuation and Deal Structure

ENTREPRENEURIAL FINANCE: Strategy Valuation and Deal Structure ENTREPRENEURIAL FINANCE: Strategy Valuation and Deal Structure Chapter 9 Valuation Questions and Problems 1. You are considering purchasing shares of DeltaCad Inc. for $40/share. Your analysis of the company

More information

Balance Sheet. 15.501/516 Accounting Spring 2004. Professor S.Roychowdhury. Sloan School of Management Massachusetts Institute of Technology

Balance Sheet. 15.501/516 Accounting Spring 2004. Professor S.Roychowdhury. Sloan School of Management Massachusetts Institute of Technology Balance Sheet 15.501/516 Accounting Spring 2004 Professor S.Roychowdhury Sloan School of Management Massachusetts Institute of Technology Feb 09, 2003 1 Some residual administrative matters Access web

More information

STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION. BALANCE SHEET As of

STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION. BALANCE SHEET As of STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION BALANCE SHEET As of ASSETS CURRENT ASSETS Cash and Cash Equivalents Cash - Restricted Accounts Receivable - Trade Accounts Receivable

More information

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 CHAPTER 19 Accounting for Income Taxes ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Reconcile pretax financial income with taxable income. 2. Identify temporary and permanent differences. 3. Determine

More information

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Liabilities 7 Accounting for and Presentation of Liabilities Liabilities are obligations of the entity or, as defined by the FASB, probable future sacrifices of economic benefits arising from present obligations of

More information

How To Balance Sheet

How To Balance Sheet Page 1 of 6 Balance Sheet Accounts The Chart of Accounts is normally arranged or grouped by the Major Types of Accounts. The Balance Sheet Accounts (Assets, Liabilities, & Equity) are presented first,

More information

07:35 CURRENT LIABILITIES & CONTINGENCIES ECON 136A REFRESHER. 136A Concepts. Notes Payable. Chapter 13

07:35 CURRENT LIABILITIES & CONTINGENCIES ECON 136A REFRESHER. 136A Concepts. Notes Payable. Chapter 13 CURRENT LIABILITIES & CONTINGENCIES Chapter 13 ECON 136A REFRESHER What is a liability? Present (not necessarily current) unavoidable obligation; Result of a past transaction; What makes a liability current?

More information

ACCOUNTING 105 CONCEPTS REVIEW

ACCOUNTING 105 CONCEPTS REVIEW ACCOUNTING 105 CONCEPTS REVIEW A note from the tutors: This handout is designed to help you review important information as you study for your cumulative final exam. While it does cover many important

More information

Accounting 500 4A Balance Sheet Page 1

Accounting 500 4A Balance Sheet Page 1 Accounting 500 4A Balance Sheet Page 1 I. PURPOSE A. The Balance Sheet shows the financial position of the company at a specific point in time (a date) 1. This differs from the Income Statement which measures

More information

Accrual Accounting Process

Accrual Accounting Process Accrual Accounting Process 15.501 Accounting Spring 2004 Professor S. Roychowdhury Sloan School of Management Massachusetts Institute of Technology Feb 17/18, 2004 1 An accountant s functions include Classifying

More information

Interpretation of Financial Statements

Interpretation of Financial Statements Interpretation of Financial Statements Author Noel O Brien, Formation 2 Accounting Framework Examiner. An important component of most introductory financial accounting programmes is the analysis and interpretation

More information

Chapter 5 Accounting for Merchandising Operations

Chapter 5 Accounting for Merchandising Operations Chapter 5 Accounting for Merchandising Operations Purchase Transactions Purchaser records goods at cost. When goods are returned, purchaser reduces Inventory. On September 5, De La Hoya Company buys merchandise

More information

CHAPTER 10 PAYROLL TAXES BONUSES EXPENDITURE CYCLE: OTHER OPERATING ITEMS

CHAPTER 10 PAYROLL TAXES BONUSES EXPENDITURE CYCLE: OTHER OPERATING ITEMS CHAPTER 10 EXPENDITURE CYCLE: OTHER OPERATING ITEMS 1 PAYROLL TAXES Employee payroll taxes: Federal income tax State income tax FICA taxes Employer payroll taxes: FICA taxes Federal unemployment taxes

More information

6. Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation.

6. Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation. 1. A company purchased land for $72,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start.

More information

PROFESSOR S NAME ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8)

PROFESSOR S NAME ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) Page 137 NAME ANSWER KEY PROFESSOR S NAME SECTION SCORE ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) INSTRUCTIONS: COMPLETE ALL

More information

Bookkeeper Business Blueprint

Bookkeeper Business Blueprint Welcome! Bookkeeper Business Blueprint Bookkeeping Knowledge - Module 5 Introduction, Recap & Preview Knowledge Module 4 Review Accrual v. Cash Basis of Accounting Bookkeeping / Accounting Principles Fixed

More information

GBA 521 Midterm Review Dr. Markelevich

GBA 521 Midterm Review Dr. Markelevich GBA 521 Midterm Review Dr. Markelevich Multiple Choice (3 points for each question) Identify the letter of the choice that best completes the statement or answers the question. Wynn Corp. Wynn Corp. reported

More information

Accounting Skills Assessment Practice Exam Page 1 of 10

Accounting Skills Assessment Practice Exam Page 1 of 10 NAU ACCOUNTING SKILLS ASSESSMENT PRACTICE EXAM & KEY 1. A company received cash and issued common stock. What was the effect on the accounting equation? Assets Liabilities Stockholders Equity A. + NE +

More information

U.S. Property and Casualty Insurance Company Income Tax Return. For calendar year 2014, or tax year beginning, 2014, and ending, 20.

U.S. Property and Casualty Insurance Company Income Tax Return. For calendar year 2014, or tax year beginning, 2014, and ending, 20. Form 1120-PC Department of the Treasury Internal Revenue Service A Check if: 1 Consolidated return (attach Form 851). 2 Life-nonlife consolidated return.. 3 Schedule M-3 (Form 1120-PC) attached... U.S.

More information

Corporations: Organization, Stock Transactions, and Dividends

Corporations: Organization, Stock Transactions, and Dividends C H A P T E R 13 Corporations: Organization, Stock Transactions, and Dividends Financial Accounting 14e Warren Reeve Duchac human/istock/360/getty Images Advantages and Disadvantages of the Corporate Form

More information

NWC = current assets - current liabilities = 2,100

NWC = current assets - current liabilities = 2,100 Questions and Problems Chapters 2,3 pp45-47 1. Building a balance sheet. Penguin Pucks, Inc., has current assets of $3,000, net fixed assets $6,000, current liabilities of $900, and long-term debt of $5,000.

More information

B Exercises 4-1. (d) Intangible assets. (i) Paid-in capital in excess of par.

B Exercises 4-1. (d) Intangible assets. (i) Paid-in capital in excess of par. B Exercises E4-1B (Balance Sheet Classifications) Presented below are a number of balance sheet accounts of Castillo Inc. (a) Trading Securities. (h) Warehouse in Process of Construction. (b) Work in Process.

More information

- Sub-standard loans 31,093 50,092 - Unrealized interest on sub-standard loans (10,535) (12,698) Net Sub-Standard Loans 20,558 37,394

- Sub-standard loans 31,093 50,092 - Unrealized interest on sub-standard loans (10,535) (12,698) Net Sub-Standard Loans 20,558 37,394 CONSOLIDATED BALANCE SHEET ASSETS (In millions of LBP) 1. Cash, Compulsory Reserves and Central Banks 1,012,603 1,014,857 2. Banks and financial institutions 1,234,691 760,707 3. Head office, branches,

More information

Glossary of Accounting Terms

Glossary of Accounting Terms Glossary of Accounting Terms Account - Something to which transactions are assigned. Accounts in MYOB are in one of eight categories: Asset Liability Equity Income Cost of sales Expense Other income Other

More information

University of Rio Grande Fall 2010

University of Rio Grande Fall 2010 University of Rio Grande Fall 2010 Financial Management (Fin 20403) Practice Questions for Midterm 1 Answers the questions. (Or Identify the letter of the choice that best completes the statement if there

More information

UNDERSTANDING FINANCIAL STATEMENTS

UNDERSTANDING FINANCIAL STATEMENTS UNDERSTANDING FINANCIAL STATEMENTS ITEM 8 It is important that the directors of any business, cooperative or otherwise, understand the financial statements of the business. Without a basic understanding

More information

PART A: TRUE/FALSE (1 point each):

PART A: TRUE/FALSE (1 point each): CHABOT COLLEGE General Accounting (BUS-7) Dmitriy Kalyagin PART A: TRUE/FALSE (1 point each): EXAM #4 (Chapters 10, 12, 13) 1. Employees who are exempt from the FLSA are entitled for overtime pay for hours

More information

HERE'S A TIP. Double Entry Accounting. Debits and Credits

HERE'S A TIP. Double Entry Accounting. Debits and Credits Double Entry Accounting Because every business transaction affects at least two accounts, our accounting system is known as a double entry system. (You can refer to the company's chart of accounts to select

More information

Equity Value, Enterprise Value & Valuation Multiples: Why You Add and Subtract Different Items When Calculating Enterprise Value

Equity Value, Enterprise Value & Valuation Multiples: Why You Add and Subtract Different Items When Calculating Enterprise Value Equity Value, Enterprise Value & Valuation Multiples: Why You Add and Subtract Different Items When Calculating Enterprise Value Hello and welcome to our next tutorial video here. In this lesson we're

More information

Authored for ENMU Tutoring Services. By Jessica Huff

Authored for ENMU Tutoring Services. By Jessica Huff By Jessica Huff The standard accounting equation is Assets=Liabilities + Stockholders Equity. Depending on which item someone is looking at will determine what the normal balance is. The normal balance

More information

Chapter 21 The Statement of Cash Flows Revisited

Chapter 21 The Statement of Cash Flows Revisited Chapter 21 The Statement of Cash Flows Revisited AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments,

More information

Financial Statement and Cash Flow Analysis

Financial Statement and Cash Flow Analysis Chapter 2 Financial Statement and Cash Flow Analysis Answers to Concept Review Questions 1. What role do the FASB and SEC play with regard to GAAP? The FASB is a nongovernmental, professional standards

More information

Learning Module 3 Journal Entries

Learning Module 3 Journal Entries Learning Module 3 Journal Entries The Accounting Equation Balance Sheet Income Statement = + + - Assets Liabilities Owners' Equity Revenue Expenses Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Recording journal

More information

Chapter 9 - Current Liabilities. Accounting For Current Liabilities

Chapter 9 - Current Liabilities. Accounting For Current Liabilities Chapter 9 - Current Liabilities Accounting For Current Liabilities C 1 Defining Liabilities Because of a past event... The company has a present obligation... For future sacrifices Past Present Future

More information

EXERCISES. Does not normally require adjustment. Normally requires adjustment (AE).

EXERCISES. Does not normally require adjustment. Normally requires adjustment (AE). EXERCISES Ex. 3 1 1. Prepaid expense 2. Accrued revenue 3. Unearned revenue 4. Accrued expense 5. Unearned revenue 6. Prepaid expense 7. Accrued expense 8. Accrued expense Ex. 3 2 Account Accounts Receivable...

More information

Assessment Schedule 2010 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224)

Assessment Schedule 2010 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224) NCEA Level 2 Accounting (90224) 2010 page 1 of 7 Assessment Schedule 2010 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224) Evidence Statement ONE Part

More information

TRUST AND AGENCY FUNDS

TRUST AND AGENCY FUNDS TRUST AND AGENCY FUNDS THE TRUST AND AGENCY FUND SECTION CONSISTS OF OVER 1,500 DIFFERENT FUNDS MAINTAINED IN THE COUNTY'S ACCOUNTING SYSTEM. THEY ARE GROUPED BELOW BY MAJOR CATEGORY FOR REPORTING PURPOSES.

More information

Corporations: Organization, Stock Transactions, and Dividends

Corporations: Organization, Stock Transactions, and Dividends C H A P T E R 11 Corporations: Organization, Stock Transactions, and Dividends Corporate Financial Accounting 13e Warren Reeve Duchac human/istock/360/getty Images Characteristics of a Corporation (slide

More information

ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET J.M. TULL SCHOOL OF ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET

ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET J.M. TULL SCHOOL OF ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET J.M. TULL SCHOOL OF ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET Important: PRINT your response (A,B,C,D or E) that best completes the statement

More information

Anadolu Hayat Emeklilik Anonim Şirketi Consolidated Balance Sheet As At 31 December 2015 (Currency: Turkish Lira (TRY))

Anadolu Hayat Emeklilik Anonim Şirketi Consolidated Balance Sheet As At 31 December 2015 (Currency: Turkish Lira (TRY)) Consolidated Balance Sheet As At ASSETS I- Current Assets A- Cash and Cash Equivalents 14 302,999,458 216,428,429 1- Cash 14 3,385 27,952 2- Cheques Received 3- Banks 14 145,598,543 87,301,020 4- Cheques

More information

Vol. 1, Chapter 3 - Accounting Adjustments

Vol. 1, Chapter 3 - Accounting Adjustments Vol. 1, Chapter 3 - Accounting Adjustments Problem 1 1. ($20,000 2,000) 48 = $375 per month 2. Jan. 31 Depreciation Expense $375 Accumulated Depreciation Van $375 To record depreciation expense for January

More information

DEPRECIATION, PROVISIONS AND RESERVES

DEPRECIATION, PROVISIONS AND RESERVES Depreciation : An Introduction DEPRECIATION, PROVISIONS AND RESERVES Suppose you have purchased a car. After some time you noticed that if you want to sell this car, its values is less than its cost price.

More information

ILLUSTRATION 5-1 BALANCE SHEET CLASSIFICATIONS

ILLUSTRATION 5-1 BALANCE SHEET CLASSIFICATIONS ILLUSTRATION 5-1 BALANCE SHEET CLASSIFICATIONS MAJOR BALANCE SHEET CLASSIFICATIONS ASSETS = LIABILITIES + OWNERS' EQUITY Current Assets Long-Term Investments Current Liabilities Long-Term Debt Capital

More information

For more course tutorials visit www.uoptutorial.com

For more course tutorials visit www.uoptutorial.com ACC 290 Final Exam Guide (New) Click Here to Buy the Tutorial http://www.uoptutorial.com/index.php?route=product/ product&path=737&product_id=11101 For more course tutorials visit www.uoptutorial.com ACC

More information

Jackson Company recorded the following cash transactions for the year:

Jackson Company recorded the following cash transactions for the year: ACC 290 Final Exam Guide (New) Click Here to Buy the Tutorial http://www.uoptutorial.com/index.php?route=product/product&path=7 37&product_id=11101 For more course tutorials visit www.uoptutorial.com ACC

More information

U.S. Corporation Income Tax Return For calendar year 2015 or tax year beginning, 2015, ending, 20

U.S. Corporation Income Tax Return For calendar year 2015 or tax year beginning, 2015, ending, 20 Form 1120 Department of the Treasury Internal Revenue Service A Check if: 1a Consolidated return (attach Form 851). b Life/nonlife consolidated return... 2 Personal holding co. (attach Sch. PH).. 3 Personal

More information

1 Money and income Currency currency notes (banknotes) coins cash bank deposits BrE: note or banknote; on paper AmE: bill

1 Money and income Currency currency notes (banknotes) coins cash bank deposits BrE: note or banknote; on paper AmE: bill 1 A B Money and income Currency The money used in a country euros, dollars, yen, etc. is its currency. Money in notes (banknotes) and coins is called cash. Most money, however, consists of bank deposits:

More information

Recording Transactions using. Financial Statement Approach

Recording Transactions using. Financial Statement Approach Recording Transactions using Financial Statement Approach Service Company Example The current presentation will cover the basics of recording transactions using the financial statement approach. The purpose

More information

CHAPTER 22. Accounting Changes and Error Analysis 4, 6, 7, 8, 9, 12, 13, 15

CHAPTER 22. Accounting Changes and Error Analysis 4, 6, 7, 8, 9, 12, 13, 15 CHAPTER 22 Accounting Changes and Error Analysis ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Differences between change in principle, change in estimate, change in entity, errors. Questions 4,

More information

Chapter Review Problems

Chapter Review Problems Chapter Review Problems Unit 17.1 Income statements 1. When revenues exceed expenses, is the result (a) net income or (b) net loss? (a) net income 2. Do income statements reflect profits of a business

More information

Company Accounts, Cost and Management Accounting

Company Accounts, Cost and Management Accounting Company Accounts, Cost and Management Accounting Roll No : 1 : 262 Time allowed : 3 hours Maximum marks : 100 Total number of questions : 8 Total number of printed pages : 8 NOTE : All working notes should

More information

In the event of a tie, the score on the last ten questions will be used as a tie-breaker.

In the event of a tie, the score on the last ten questions will be used as a tie-breaker. NEW YORK STATE ASSOCIATION FUTURE BUSINESS LEADERS OF AMERICA SPRING DISTRICT MEETING ACCOUNTING II 2010 TEST DIRECTIONS 1. Complete the information requested on the answer sheet. PRINT your name on the

More information

Chapter 8 Accounting for Receivables

Chapter 8 Accounting for Receivables Chapter 8 Accounting for Receivables Accounts Receivable Accounts Receivables are current assets. They are usually expected to be collected within 30 days. Allowance Method and Bad Debt Expense 2 methods:

More information

Test 3 Review. Student:

Test 3 Review. Student: Test 3 Review Student: 1. A credit sale of $2,500 to a customer would result in: A. A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts

More information

Understanding Financial Statements. For Your Business

Understanding Financial Statements. For Your Business Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

Understanding Financial Statements: What do they say about your business?

Understanding Financial Statements: What do they say about your business? Understanding Financial Statements: What do they say about your business? This workbook is not designed to be your only guide to understanding financial statements. A much wider range of resources is available

More information

Financial Statements

Financial Statements Financial Statements The financial information forms the basis of financial planning, analysis & decision making for an organization or an individual. Financial information is needed to predict, compare

More information

ASSETS. Are cash and other Assets expected to be converted into cash, either in One Year or in the operating cycle, which ever is longer.

ASSETS. Are cash and other Assets expected to be converted into cash, either in One Year or in the operating cycle, which ever is longer. ASSETS Current Assets: Are cash and other Assets expected to be converted into cash, either in One Year or in the operating cycle, which ever is longer. sold, or consumed funds. : It is the money on deposit

More information

CHAPTER 4. FINANCIAL STATEMENTS

CHAPTER 4. FINANCIAL STATEMENTS CHAPTER 4. FINANCIAL STATEMENTS Accounting standards require statements that show the financial position, earnings, cash flows, and investment (distribution) by (to) owners. These measurements are reported,

More information

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING FINANCIAL ACCOUNTING FORMATION 2 EXAMINATION - AUGUST 2012 NOTES: You are required to answer Question 1. You are also required to answer any three out of Questions 2 to 5. (If you provide answers to all

More information

Home Mortgage Interest Deduction

Home Mortgage Interest Deduction Department of the Treasury Internal Revenue Service Publication 936 Cat.. 10426G Home Mortgage Interest Deduction For use in preparing 1998 Returns Contents Introduction... 1 Part I: Home Mortgage Interest...

More information

10,244,076 12,293,446 762,193,593 635,132,711

10,244,076 12,293,446 762,193,593 635,132,711 Financial Statements 2007 45 Balance Sheet As at December 31, 2007 2006 2007 US Dollars in '000 Note 2007 2006 Rupees in '000 ASSETS 1,268,149 1,530,214 Cash and balances with treasury banks 6 94,873,249

More information

國 立 體 育 學 院 九 十 六 學 年 度 學 士 班 轉 學 考 試 試 題

國 立 體 育 學 院 九 十 六 學 年 度 學 士 班 轉 學 考 試 試 題 國 立 體 育 學 院 九 十 六 學 年 度 學 士 班 轉 學 考 試 試 題 會 計 學 ( 本 試 題 共 8 頁 ) 注 意 :1 答 案 一 律 寫 在 答 案 卷 上, 否 則 不 予 計 分 2 請 核 對 試 卷 准 考 證 號 碼 與 座 位 號 碼 三 者 是 否 相 符 3 試 卷 彌 封 處 不 得 汚 損 破 壞 4 行 動 電 話 或 呼 叫 器 等 通 訊 器 材 不

More information

How To Calculate Financial Leverage Ratio

How To Calculate Financial Leverage Ratio What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK

More information

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations:

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: TRANSACTIONS ANALYSIS EXAMPLE Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: 1. Billings to clients for services provided: $350,000

More information

Century 21 Accounting, 8e General Journal Chapter Outlines

Century 21 Accounting, 8e General Journal Chapter Outlines Century 21 Accounting, 8e General Journal Chapter Outlines PART 1 Chapter 1 ACCOUNTING FOR A SERVICE BUSINESS ORGANIZED AS A PROPRIETORSHIP Starting A Proprietorship: Changes that Affect the Accounting

More information

WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY

WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY Accounting Technician 1 WORK PROCESS SCHEDULE ACCOUNTING TECHNICIAN O*NET-SOC CODE: 43-3031.00 RAIS CODE: 1125HY DESCRIPTION: Compute, classify, and record numerical data to keep financial records complete.

More information

Learn Accounting Understand Business: Course Review Answers

Learn Accounting Understand Business: Course Review Answers Learn Accounting Understand Business: Course Review Answers 1. What type of accounting measures the activity of the company by looking at economic events regardless of when cash transactions occur? A.

More information

UNIONS TOPICAL INDEX ACCOUNTING MANUAL FOR FEDERAL CREDIT 100-1

UNIONS TOPICAL INDEX ACCOUNTING MANUAL FOR FEDERAL CREDIT 100-1 ACCOUNTING MANUAL FOR FEDERAL CREDIT UNIONS TOPICAL INDEX ACCURATE AND CURRENT RECORDS ESSENTIAL 200-3 BASIC ACCOUNTING RECORDS 200-3 Double-Entry System 200-3 Types Of Accounts 200-4 PURPOSE OF RECORDS

More information

Working Capital Concept & Animation

Working Capital Concept & Animation Working Capital Concept & Animation Meaning A measure of both a company's efficiency and its short-term financial health. The working capital is calculated as: Working Capital = Current Assets Current

More information

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2 Chapter 7 Solutions EXERCISES Exercise 7 2 Cash and cash equivalents includes: Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total

More information

THEME: ANALYZING FINANCIAL STATEMENTS

THEME: ANALYZING FINANCIAL STATEMENTS THEME: ANALYZING FINANCIAL STATEMENTS By John W. Day, MBA ACCOUNTING TERMS: Vertical & Horizontal Analysis Vertical analysis means reviewing one year or less of data. A good example is the profit and loss

More information

Chapter 13 Financial Statements and Closing Procedures

Chapter 13 Financial Statements and Closing Procedures Chapter 13 - Financial Statements and Closing Procedures Chapter 13 Financial Statements and Closing Procedures TEACHING OBJECTIVES 13-1) Prepare a classified income statement from the worksheet. 13-2)

More information

Chart of Accounts. Chart of Accounts

Chart of Accounts. Chart of Accounts Chart of Accounts A company s Chart of Accounts is a list of all Asset, Liability, Equity, Revenue, and Expense accounts included in the company s General Ledger. The number of accounts included in the

More information

INSTRUCTIONS FOR COMPLETING INSURANCE COMPANY FINANCIAL STATEMENTS

INSTRUCTIONS FOR COMPLETING INSURANCE COMPANY FINANCIAL STATEMENTS INSTRUCTIONS FOR COMPLETING INSURANCE COMPANY "DRAFT VERSION FOR FIRST REVIEW ONLY" Submitted to: Minstry of Finance and Economy Head of Insurance Department Republic of Armenia Submitted by: BearingPoint

More information

UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT

UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT ACCRUAL BASIS JUDGE: UNITED STATES BANKRUPTCY COURT NORTHERN & EASTERN DISTRICTS OF TEXAS REGION 6 MONTHLY OPERATING REPORT MONTH ENDING: MONTH YEAR IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED

More information

Paper F6 (ZWE) Taxation (Zimbabwe) Thursday 9 June 2016. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants

Paper F6 (ZWE) Taxation (Zimbabwe) Thursday 9 June 2016. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants Fundamentals Level Skills Module Taxation (Zimbabwe) Thursday 9 June 2016 Time allowed Reading and planning: 15 minutes Writing: 3 hours This question paper is divided into two sections: Section A ALL

More information

Financial Planning Questionnaire

Financial Planning Questionnaire Richard W. Greene Managing Principal rgreene@centerpointadvisors.net Jennifer M. Wolfsberg Managing Principal jwolfsberg@centerpointadvisors.net John E. Wolfsberg Principal / Director of Fixed Income jewolfsberg@centerpointadvisors.net

More information