Lecture Survey of accounting - Chapter 2: An introduction to accounting

Understanding the Accounting Cycle Chapter 02 McGraw­Hill/Irwin Copyright © 2012 by The McGraw­Hill Companies, Inc. All rights reserved. 2-2 Learning Objectives 1. Record basic accrual and deferral events in a horizontal financial statements model. 2. Organize general ledger accounts under an accounting equation. 3. Prepare financial statements based on accrual accounting. 4. Describe the closing process, the accounting cycle, and the matching concept. 5. Explain how business events affect financial statements over multiple accounting cycles. 6. Classify accounting events into one of four categories: a. Asset source transactions. b. Asset use transactions. c. Asset exchange transactions. d. Claims exchange transactions. 2-3 General Ledger Accounts Assets = Liabilities + Stockholders` Equity Cash SalariesPayable (1) 5,000 (7) 6,000 (3) 60,000 6,000 (4) (10,000) (5) (2,000) Bal. 53,000 AccountsReceivable (2) 84,000 (3) (60,000) Bal. 24,000 Closing Entries: Cl. 1: Transfers balance in revenue to retained earnings Cl. 2 & 3: Transfer balances in expenses to retained earnings Common Stock (1) 5,000 Retained Earnings Cl. 1 84,000 Cl. 2 (16,000) Cl. 3 (2,000) Bal. 66,000 Consulting Revenue (2) 84,000 Cl. 1 (84,000) Bal. - Salary Expense (4) (10,000) (7) (6,000) Cl. 2 16,000 Bal. - Advertising Expense (6) (2,000) Cl. 3 2,000 Bal. - Here are the general ledger accounts for Cato Consultants after closing the temporary accounts. On the next slides are the resulting financial statements. 2-4 Financial Statements CATO CONSULTANTS Income Statement For the Year Ended December 31, 2012 Consulting Revenue Salary Expense Advertising Expense Net Income $ 84,000 (16,000) (2,000) $ 66,000 CATO CONSULTANTS Statement of Changesin Stockholders` Equity For the Year Ended December 31, 2012 Beginning Common Stock 0 Plus: Common Stock Issued 5,000 Ending Common Stock Beginning Retained Earnings Plus: Net Income Less: Dividends Ending Retained Earnings Total Stockholders` Equity $ 5,000 0 66,000 0 66,000 $ 71,000 2-5 Financial Statements CATO CONSULTANTS Balance Sheet Asof December 31, 2012 Assets Cash AccountsReceivable Total Assets $ 53,000 24,000 $ 77,000 Liabilities SalariesPayable $ 6,000 Stockholders` Equity Commn Stock $ 5,000 Retained Earnings 66,000 Total Stockholders` Equity 71,000 Total Liabilitiesand Stockholders` Equity $ 77,000 ... - tailieumienphi.vn