ACC 358 Lecture Notes - Lecture 2: Certified Public Accountant, Deferral, General Ledger

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indigolion532

18 May 2018

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The length of time for which a business summarizes its financial information and reports its financial

performance.

Work sheet

A columnar accounting form used to summarize the general ledger information needed to prepare

financial statements.

Trial balance

A proof of the equality of debits and credits in a general ledger.

Prepaid expense

Cash paid for an expense in one fiscal period that is not used until a later period.

Net loss

The difference between total revenue and total expenses when total expenses are greater.

Net income

The difference between total revenue and total expenses when total revenue is greater.

Income statement

A financial statement showing the revenue and expenses for a fiscal period.

Fiscal year

A fiscal period consisting of 12 consecutive months.

Certified public accountant (CPA)

An accountant who has passed the uniform certified public accounting exam and met the licensing

requirement for a state.

Cash basis of accounting

Reporting income when the cash is received and expenses when the cash is paid.

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Document Summary

The length of time for which a business summarizes its financial information and reports its financial performance. A columnar accounting form used to summarize the general ledger information needed to prepare financial statements. A proof of the equality of debits and credits in a general ledger. Cash paid for an expense in one fiscal period that is not used until a later period. The difference between total revenue and total expenses when total expenses are greater. The difference between total revenue and total expenses when total revenue is greater. A financial statement showing the revenue and expenses for a fiscal period. A fiscal period consisting of 12 consecutive months. An accountant who has passed the uniform certified public accounting exam and met the licensing requirement for a state. Reporting income when the cash is received and expenses when the cash is paid. A financial statement that reports assets, liabilities, and owner"s equity on a specific date.

Related Questions

1. Closing entries are journalized and posted

a. before the financial statements are prepared.

b. after the financial statements are prepared.

c. at management's discretion.

d. at the end of each interim accounting period.

2. Using the following income statement for the month of June 2018 of Delgado Enterprises to answer the following question.

Revenues                                                    $7,000
Expenses:
       Wages Expense                   $2,000
       Rent Expense                         1,000
       Supplies Expense                      300
       Advertising Expense                  200
       Insurance Expense                    100
           Total expenses                                  3,600
                                                                   ______
       Net income                                          $3,400

The entry to close the revenue account includes a:

a. debit to Retained Earnings for $7,000.

b. credit to Dividend for $7,000.

c. debit to Income Summary for $7,000.

d. credit to Income Summary for $7,000.

blushfox713

Problem 1-33Interrelationships among financial statements Crawford Enterprises started the 2014 accounting period with $75,000 of assets (all cash), $15,000 of liabilities, and $25,000 of common stock. During the year, Crawford earned cash revenues of $46,000, paid cash expenses of $26,000, and paid a cash dividend to stockholders of $5,000. Crawford also acquired $15,000 of additional cash from the sale of common stock and paid $10,000 cash to reduce the liability owed to a bank. Required a.Prepare an income statement, statement of changes in stockholdersâ equity, period-end balance sheet, and statement of cash flows for the 2014 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.) b.Determine the percentage of total assets that were provided by creditors, investors, and earnings. c.Determine the balance in the Revenue, Expense, and Dividends accounts as of January 1, 2015. LO 1-2, 1-3, 1-4, 1-5, 1-6, 1-7 CHECK FIGURES a. Net Income: $19,000 e. Net Cash Flow from Operating Activities: $19,000

lavenderwombat729

Please build the answer based on following text from studyingbook:

Expense Accounts. Expenses are costs incurredby an organization in the process of earning revenue during a givenperiod of time. Typical expense accounts related to payroll wouldinclude such items as wages, salaries, employer payroll expenses,and group insurance benefit expenses. Payroll expenses have adirect impact on the profitability of an organization.

In an expense account, debit entries increase the expensebalance and credit entries decrease the expense balance. Amounts inthe expense accounts are cleared to zero (or restarted at zero) atthe fiscal year-end. This is the same way the employeesâ totals inthe payroll register are cleared to zero at the taxationyear-end.

Expense accounts include expenses incurred by an organization inthe process of earning revenue during a given time period. Thesalary expense account details the debits (for example, employeesalaries and wages) and credits (for example, accrual reversals,recalls and cancelled pays) posted on the journal entries for theperiod. Entries are posted to the General Ledger at theorganization or department total level, rather than with theindividual employee details.

Since expense accounts continue to build over time and are notcleared until the end of the fiscal period, the most commonreconciliation methods used for theseaccounts are:
- reasonableness
- year-over-year comparison

A reasonableness test requires anindividual to examine the General Ledger account in detail and toensure that all the postings are in balance and seem valid.

By examining the payroll register or other reports providingdetails of the total amount posted to an account, it should beanalyzed whether the amount shown in the account is correct.Recalled pays, cancelled cheques and manual cheques should berecorded as they occur so that accounts reflect the most currentdata.

Cost accounting plays a significant role in expense accountreconciliation as well. An organization that uses cost accountingwill charge expenses to a department, a project or a contract,according to their internal requirements. If an employee istransferred from one department or branch to another, and thepaperwork is not processed when the change is effective, theemployeeâs salary, and any associated employer expenses, will beexpensed incorrectly. A journal entry will be required to move theexpenses to the correct accounts.

As expense accounts normally have a debit balance, to reduce theexpense you credit the account and to increase the expense youdebit the account.

A year-over-year comparison wouldcompare each expense account for a certain time frame to determineif there have been material changes.

Question :

List three expense accounts related to payroll.Describe when you would expect the account to be cleared to zero.Explain the methods you could use to reconcile theseaccounts.

ochrecrab155

ACC 358 Lecture Notes - Lecture 2: Certified Public Accountant, Deferral, General Ledger

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