Textbook Notes (368,449)
Canada (161,886)
Business (358)
BUSI 1001 (2)
Chapter 3

Ch3Sept23.docx

4 Pages
58 Views
Unlock Document

Department
Business
Course
BUSI 1001
Professor
Emily Gray
Semester
Fall

Description
BUSI1001 Chapter 3: Sept. 23, 2013  Examples: Makes a $900 on account. Accounts receivable  900 Sales 900 Collect A/R Cash  900 accounts Receivable 900 Make sale of inventory item for cash ­ $800. Item sold originally cost me $500. Cash 800 Sales 800 Cost of goods sold  500 Inventory  500 Employees work for 2 weeks. Then payday, we pay them $5000. Salaries or Wages expense  5000 Cash 5000  Electricity bill comes in ­ $700 (pay us in 30 days)  Utilities expense  700 Accounts payable  700 Chapter 3­ accrual accounting Transactions that impact the statement of income ­statement of financial position accounts are permanent accounts in that their balances  carry over from one fiscal year to the next ­income statement accounts are temporary because they get reset to zero at the beginning  of each fiscal year Cash vs. Accrual Accounting  cash basis of accounting ­ revenues and expenses are recorded only when cash is received  or paid accrual basis of accounting ­ revenues are recognized when earned (regardless of when  the cash is received) and expenses are recognized when incurred (regardless of when the  case is paid Adjusting Entrie Summary: Prepayments – Accruals – Cash is paid or received before the event Event has occurred, but the cash has not yet been paid or received Expenses Prepaid expenses: Accrued Expenses Dr. Asset / Cr. Cash Dr. Expense orAsset / Cr.Accounts Payable Revenues Unearned Revenues Accrued Revenues Dr. Cash / Cr. Liabilities Dr. Receivable; Cr. Revenues Adjusting entries­ prepaid expenses ­costs are initially recorded as assets and allocated to expenses of future periods examples:  – prepaid rent and insurance – office supplies – plant and equipment ex 1: Transaction: you start the year with $3,500 of office supplies. During the year you  purchase $7,000 of supplies. At the end of the year, the inventory count reveals that there  are $2,700 of supplies on hand. SEE WRITTEN WORK T­ACCOUNTS Ex 2: Transaction: you purchased equipment at a cost of $75,000 at the beginning of the year.  The 
More Less

Related notes for BUSI 1001

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit