ACC 131 Lecture Notes - Lecture 3: Accounting Information System, Retained Earnings, Trial Balance
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Document Summary
A balance sheet is prepared using an adjusted trial balance and a statement of. The statement of retained earnings is prepared using an adjusted trial balance and an income statement. Net income is not reported in balance sheet. Cash-basis accounting- revenue is recorded when cash is received, regardless of when it is earned. Ties recognition of revenues/expenses to exchange of cash. Not commonly used b/c does not reflect all assets/liabilities at a particular date. Accrual-basis accounting- revenues recorded when earned/expenses are matched o o to the periods where they help produce revenue o. Revenue recognition principle- determines when revenue is recorded/reported. Both conditions must be met to record revenue. Revenue is recorded regardless of when cash is received. Expense recognition (matching) principle- cost of assets used/liabilities created in operation of business o. Expenses required to be recorded in same period as the revenue it helped generated. Excludes costs used to earn revenue in an earlier/later period.
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Related Questions
ACC 121 -Financial Statement Problem | |||||||
Given the adjustedtrial balance below, prepare (in good form) an income statement,statement of retained earnings, and balance sheet. The name of thebusiness Income Solutions, Inc and the accounting period coincideswith the calendar year. | |||||||
Income Solutions, Inc | |||||||
Adjusted Trial Balance | |||||||
December 31, 20x5 | |||||||
Cash | $ 695 | ||||||
Accounts Receivable | 1,700 | ||||||
Supplies | 45 | ||||||
Prepaid Insurance | 45 | ||||||
Office Equipment | 2,500 | ||||||
Accumulated Depreciation - Office Equipment | $ 400 | ||||||
Accounts Payable | 1,700 | ||||||
Salaries Payable | 100 | ||||||
Common Stock | 1,000 | ||||||
Retained Earnings | 900 | ||||||
Service Revenue | 2,855 | ||||||
Salaries Expense | 1,650 | ||||||
Supplies Expense | 110 | ||||||
Insurance Expense | 110 | ||||||
Depreciation Expense - Office Equipment | 100 | ||||||
$ 6,955 | $ 6,955 | ||||||
Barnes Realtors, Inc. prepared the following random list ofassets, liabilities, revenues, and expenses from its December 31,2014 year end accounting records. Prepare the Income statement,Statement of retained earnings and the CLASSIFIED balance sheet forBarnes Realtors, Inc., as of December 31, 2014. Each of yourstatements should have the 3-line heading, and your balance sheetshould be a CLASSIFIED Balance Sheet.
Account | Debit | Credit |
Cash | 800 | |
Common Stock | 11,640 | |
Unearned Revenue | 4,100 | |
Inventory | 2,000 | |
Supplies Expense | 1,200 | |
Supplies | 1,900 | |
Prepaid Rent | 500 | |
Goodwill | 6,000 | |
Building | 40,000 | |
Depreciation Expense | 1,400 | |
Notes Payable, due 2020 | 2,300 | |
Accounts Receiveable | 1,000 | |
Paid in Excess of Par | 3,000 | |
Retained Earnings | 5,100 | |
Income Tax Expense | 8,040 | |
Service Revenue | 33,000 | |
Rent Expense | 2,300 | |
Accounts Payable | 7,500 | |
Salaries Expense | 6,400 | |
Accumulated Depreciation | 8,500 | |
Dividends | 2,000 | |
Cost of Goods Sold | 1,600 | |
Totals | 75,140 | 75,140 |