Financial accounting basics ppt @ bec-doms

P. ACCOUNTING CYCLE ,[object Object],[object Object],[object Object]

P. ACCOUNTING CYCLE (cont) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

P. ACCOUNTING CYCLE (cont) Example – ABC Company ,[object Object],[object Object],[object Object]

ABC Company – Ledger Balances + Cash - + Inventory - - Note Payable + - Paid-in Capital + - Retained Earnings + + Accts Rec - - Accts Payable + 10,000 10,000 5,000 5,000 8,000 8,000 5,000 2,000 4,000 - Sales Revenue + + COGS Expense - 2,000 2,500 2,500 8,000 8,000 4,000 5,000 5,000 5,000 2,000 0 14,500 10,000 5,000 7,500 6,000 0

Trial Balance ,[object Object],ABC Company January 31, Year 1 Trial Balance Account Debit Credit Cash 14,500 Inventory 2,000 Note payable 5,000 Paid-in capital 10,000 Retained earnings 0 Sales revenue 7,500 Cost-of-goods-sold expense 6,000 0 Total 22,500 22,500 Note that total debits ($22,500) = total credits ($22,500). Note also that Retained earnings has a balance of zero because the revenue and expense accounts have not yet been closed to retained earnings.

Prepare Income Statement and Retained Earnings Statement ,[object Object],[object Object],[object Object],ABC Company Income Statement For the period January 1–31, Year 1 Sales revenue $7,500 Cost of goods sold expense 6,000 Income $1,500 ABC Company Retained Earnings Statement For the period January 1–31, Year 1 Retained earnings, January 1 $ 0 Income, January 1,500 Dividends, January 0 Retained earnings, January 31 $1,500

ABC Company – Ledger Balances (Post-closing) + Cash - + Inventory - - Note Payable + - Paid-in Capital + - Retained Earnings + + Accts Rec - - Accts Payable + 10,000 10,000 5,000 5,000 8,000 8,000 5,000 2,000 4,000 - Sales Revenue + + COGS Expense - 2,000 2,500 2,500 8,000 8,000 4,000 5,000 5,000 5,000 2,000 0 14,500 10,000 5,000 7,500 6,000 0 7,500 6,000 6,000 7,500 0 0 1,500

Post-Closing Trial Balance ,[object Object],ABC Company January 31, Year 1 Post-Closing Trial Balance Account Debit Credit Cash 14,500 Inventory 2,000 Note payable 5,000 Paid-in capital 10,000 Retained earnings 1,500 Sales revenue 0 Cost-of-goods-sold expense 0 0 Total 16,500 16,500

Prepare Balance Sheet ,[object Object],ABC Company Balance Sheet January 31, Year 1 Assets Liabilities and Equity Cash $14,500 Note payable $ 5,000 Inventory 2,000 Total liabilities 5,000 Total assets $16,500 Paid-in capital 10,000 Retained earnings 1,500 Total liab & equity $16,500

Prepare Statement of Cash Flows ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Prepare Statement of Cash Flows ,[object Object],ABC Company Statement of Cash Flows For the period January 1-31, Year 1 Operating Activities Cash collected from customers $ 7,500 Cash paid to suppliers (8,000 ) Net cash flow from operating activities (500 ) Investing Activities Purchases of long-term assets 0 Net cash flow from operating activities 0 Financing Activities Increase in paid-in capital 10,000 Increase in long-term debt (note payable) 5,000 Net cash flow from financing activities 15,000 Net change in cash during the period 14,500 Cash balance, January 1 0 Cash balance, January 31 $14,500

COMPREHENSIVE EXERCISE ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

COMPREHENSIVE EXERCISE (cont) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Financial accounting basics ppt @ bec-doms

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Financial accounting basics ppt @ bec-doms