information. The FASB issued the following guideline for recognizing revenue: "Revenue is recognized when it is realized or realizable and it is earned" (Siegel, Levine, Qureshi, & Shim, 2001). Analysis and Journalizing Many businesses use a double-entry system that is a method that records every action with a debit and a credit. In order to make both sides of an accounting equation equal, the corporation must figure how an action will affect both sides of the equation. Credit items display the result
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sales, expenses, wages, purchases, and receivables. These transactions are maintained in various journals and ledgers and tell the financial story of the business. The process of maintaining this financial story is called the Accounting Cycle. Evaluation There are ten steps involved in completing the accounting cycle. They are as follows: “(1) Transactions are analyzed and recorded in the journal. (2) Transactions are posted to the ledger. (3) An unadjusted trial balance is prepared. (4)
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000.00 | 29,750.40 | 4958.45 | 312,331.33 | 12/31/2008 | 36,000.00 | 27,046.80 | 4507.85 | 307,823.48 | 12/31/2009 | 36,000.00 | 24,588.00 | 4098.04 | 303,725.44 | 12/31/2010 | 36,000.00 | 22,352.40 | 3725.44 | 300,000.00 | | | | | | Journal entries Purchase of Bond 1/1/2006 Purchase of 12% Bond 300,000.00 Loss on purchase of bond 22,744.44 Cash 322,744.44 To record interest and bond premium amortization 12/31/2006 Interest revenue 30,545.34 Bond premium 5,454.66 Cash 36,000
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every desk and chair. Each account, usually abbreviated а/с, frequently has its own page in the organization's ledger. Double-entry: A method of bookkeeping in which the twofold effect of every entry is recorded, thus requiring two entries to record each transaction. By recording both effects of each transaction, this system offers protection against error. Single-entry: Any bookkeeping system that does not include the complete results of each transaction. It is usually used by small companies or
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San Francisco State University Accounting 504 Midterm I The point value for each question is indicated below. Since the test will be graded using a positive grading system, it is to your advantage to ATTEMPT EVERY QUESTION. If you have any questions, please ask me. Good Luck!! 1. A statistical section should be included in a. A Comprehensive Annual Financial Report b. The basic financial statements c. The notes to the financial statements d. Required Supplemental
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IMPORTANCE OF ADJUSTMENT ENTRIES Importance of Adjustment Entries Jourdain M. Yardan American Intercontinental University IMPORTANCE OF ADJUSTMENT ENTRIES ABSTRACT Adjustment entries are made to handle issues that occur from events that directly affect expenses and revenue for accounting periods. The four types of accounting entries are accrued revenues, unearned revenues, accrued expenses, and
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Part 1: Double-Accounting Method of Recording When using the double-accounting system, also known as the double-entry method, each transaction on the General Journal and associated account activity catalog must be recorded at least into two accounts. The debit account, often on the left, is denoted by ‘Dr’ while the credit account, often on the right side, is denoted by ‘Cr’. The entries are made depending on the account type, which may be an asset, a liability, an expense account etcetera, or depending
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using journals and ledgers. 4. An account is often referred to as a T-account because of the way it is constructed. 5. A debit to an account indicates an increase in that account. 6. If a revenue account is credited, the revenue account is increased. 7. The normal balance of all accounts is a debit. 8. Debit and credit can be interpreted to mean increase and decrease, respectively. 9. The double-entry system
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account. 4 marks 1.2.5 Explain why it would be necessary to make a balance day adjustment at 30 June as a result of the information provided on 26 June relating to rent. 2 marks 1.2.6 Show how the rent would be reported at 30 June after all adjusting entries had been recorded. 3 marks Question 1 – continued TURN OVER Date 2011 IN $ Total $ OUT $ Total $ $ Total $ Fantastic Footwear Memo 43 One pair of Tiger Tearaway shoes taken from stock for personal use. T Trimble Fantastic Footwear
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into consideration and the adjusting entry brings the Allowance account up to the desired amount. If the allowance account has a debit balance, it is “overdrawn”. In other words, there have been more write-offs than planned. If the allowance account has a credit balance, it has a positive balance and has not been utilized as fully as was expected. Accounting for bad debts expense is done only at the end of the accounting period and is done as an adjusting entry. The Bad debt expense account is
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