1. $200 $300 $400 $500 $100 $200 $300 $400 $500 $100 $200 $300 $400 $500 $100 $200 $300 $400 $500 $100 $200 $300 $400 $500 $100 Terminology Financial Statements GAAPTransactionsOther

2. BUSINESS TRANSACTION

3. A financial event that affects assets, liabilities or owners equity

4. An asset representing amounts due from customers

5. ACCOUNTS RECEIVABLE

6. Costs incurred by a business in earning revenue

7. EXPENSES

8. Owner withdrawing money for personal use

9. DRAWINGS

10. The fees a business charges for buying or selling goods (ex: real estate, for clients)

11. COMMISSIONS

12. The two financial statements are called…

13. INCOME STATEMENT & BALANCE SHEET

14. The financial statement that is completed first

15. INCOME STATEMENT

16. Advertising Expense can be found on the..

17. INCOME STATEMENT

18. What 3 questions does the heading of an Income Statement ask

19. WHO? WHAT? WHEN?

20. What does the income statement tell the reader?

21. HOW MUCH THE BUSINESS MADE OR LOST OVER A REPORTED PERIOD OF TIME

22.  Revenue should be recognized at the time of sale and/or rendering services

23. GAAP REVENUE PRINCIPLE

24. Expenses must be recognized and recorded when they are incurred

25. GAAP EXPENSES PRINCIPLE

26. Revenues & expenses must be correlated to report net income/net loss for an accounting period

27. GAAP MATCHING PRINCIPLE

28. One aspect of accounting theory that views the business as being separate, distinct, and apart from its owners

29. GAAP ENTITY CONCEPT

30. DAILY DOUBLE

32. Taylor’s Catering Co. Advertised on the local radio station, Country 100. They received the radio station’s monthly invoice on March 29, 2009. The invoice indicated that payment was due by the 15 th of the following month. 1.What GAAP underlies this transaction? 2. What is the key date in this transaction? Why is this date regarded as key? 3. Record the elements that are affected, whether they increase or decrease the accounting equation and explain why?

33. 1.Expense Principle 2.March 29, 2009 – b/c the expense is recognized when the expense is incurred, not when the cash is paid out. 3. The elements affected are liabilities (increase) and owner’s equity (decrease – new expense). Two accounts – accounts payable and advertising expense

34. Salaries, Heat, Phone, Cell Phone, Adverstising

35. EXPENSES

36. Received $280 on account from a client -What accounts are affected? -Increase or decrease?

37. ACC. REC. decreases by 280 CASH increases by 280

38. Paid $1500 on account Accounts? Increase or Decrease?

39. Acc. Pay. Decreases by $1500 Cash Decreases by $1500

40. When a computer is purchased for cash, what side of the account is affected?

41. LEFT SIDE ASSETS

42. The new info added to the OE section of the balance sheet in this chapter...

43. - REVENUE AND EXPENSES (NET INCOME OR NET LOSS) - DRAWINGS

44. Create the OE section of the balance sheet based on the following information: Drawings $1200 Capital $10 000 Net Income $ 8 000

45. Owner’s Equity Lapointe, Capital $10 000 Add: Net Income 8 000 18 000 Less: Drawings 1 200 Total Owner’s Equity $16 800

46. What is the difference between sales and fees earned?

47. SALES – SELLING GOODS FEES EARNED – SERVICE BASED BUSINESS

48. When an asset is bought on credit, liabilities...

49. INCREASE

50. Sold services to a customer on credit. A = L + OE Accounts? Increase? Decrease?

51. Fees Earned – Increase Acc. Rec. - Increase

52. Paid cash for rent expense. Accounts? Increase? Decrease?

53. CASH – DECREASES RENT EXPENSE – IS SUBTRACTED FROM REVENUE

54.  As a team create an income statement and balance sheet based on the information on the next slide.  You must create it as a group and submit one copy of each sheet. The same person cannot write both.

55.  Lapointe’s Teaching Service (Aug. 31, 2009)  Fees Earned: 10 000, Rent Expense: 2000, Advertising Expense: 1000, Telephone Expense: 500- IS – for the month  Cash: 10 000, Car: 7000, Equipment: 2000, Bank Loan Pay: 6000, Acc.Pay. Joe: 200, Acc.Pay. John: 800, Drawings: 1000, Capital 6500

56. - Income Statement - Balance Sheet

57.  Return back to your original seat  Hand out study guide  Ch. Problems and Questions due the day of exam  Practice Test and Quizzes Due