Chapter 1-8 Review Journal Entries, T Accounts, the Accounting Equation, Accruals, Inventory, Accounts Receivable…. Financial Accounting, Seventh Edition

In Chapter 8 You learned: o How to account for cash and accounts receivable o Why it’s important to control cash o How a company accounts for bad debts o Types of short term receivables

Let’s talk a walk down memory lane…. What do Accountants do? What are the four Acct statements? What is an Accounting transaction? What is the FIRST step in booking a transaction? Next step

More….. How do you title one of the four statements – Line 1 – Line 2 – Line 3 What are the categories of Accounts? What are sample accounts under each category? Normal balance?

Conventions What are adjusting journal entries? – Examples? What is the transaction for booking the purchase of Inventory? What is the transaction for booking the sale of Inventory? What is the perpetual inventory method? What is the periodic inventory method?

Chapters 5-8 What is – Average cost, FIFO, LIFO What is the Accounts Receivable? How do we account for Bad Debts? Let’s practice…. Refer to the handout that came with your coursepack (or use a blank paper)

ACCT. 201 REVIEW... Stockholders invest $35,000 in a company DR: ____________ $______________ CR: ____________ $______________

ACCT. 201 REVIEW... Purchased $400 Office Supplies on Credit DR: ____________ $______________ CR: ____________ $______________

ACCT. 201 REVIEW... Purchased $6,000 Office Equipment on for $2,500 Cash & the rest on Credit. DR: ____________ $______________ CR: ____________ $______________

ACCT. 201 REVIEW... Billed clients for consulting fees for Services performed, $4,000. DR: ____________ $______________ CR: ____________ $______________

ACCT. 201 REVIEW... Paid $2,200 cash for office salaries. DR: ____________ $______________ CR: ____________ $______________

ACCT. 201 REVIEW... Received a check for $3,000 from a client in payment on account for commissions billed in previous transaction. DR: ____________ $______________ CR: ____________ $______________

Adjusting Entries Revenue Recognition & Matching Principles

So how do you adjust… 1) Supplies, if at the end of the month you count them and there are only $225 on hand? DR: ____________ $______________ CR: ____________ $______________ 2) Revenue, if you performed $2,200 worth of consulting, but you didn’t bill them? DR: ____________ $______________ CR: ____________ $______________

Accrual Basis Accounting Revenue recorded only when earned not when cash is received Expense recorded only when incurred not when cash paid— in the period in which the company benefited from it

Accrual Basis adheres to... Generally Accepted Accounting Principles

Year 1 Year 2 Purchased paint, painted building, paid employees Received payment for work done in year one Activity Accrual basis Cash basis Revenue $80,000 Expense 50,000 Net Income $30,000 Revenue $ 0 Expense 50,000 Net Loss ( $50,000) Revenue $80,000 Expense 0 Net Income $80,000 Revenue $ 0 Expense 0 Net Income $ 0 Illustration 4-2

Still confused? Do we need another way to learn this concept?

Revenue Recognition – a rap If you wanna be accrual Here’s what you gotta do, When the service is performed You book the Revenue!

Opener - Thursday Sit in your NEW TEAMS, delegate a note taker – , phone #, cell phone #, NAME – Assign homework chapter 8 & 9 (list by name) – Give transparency to these people – Send me and your teammates an BEFORE Tuesday with above info. Turn in your outlines for Chapter 9 —turn in to me as a group Get ready for mini quiz

Mini quiz Write out expanded Accounting Equation List examples of accounts below (up to five accounts) Turn paper over when done Turn in by team

Housekeeping… Contract questions… Outline, course schedule by day Begin ch 9 extra credit – – WSA Mock Sessions AND Review Sessions