Financial Accounting Final

any receivable

asset dr

any payable

liability cr

unearned revenue

liability cr

bad debt expense

expense dr

allowance for doubtful accounts

contra asset cr

depreciation/amortization/depletion expense

expense cr

accumulated depreciation/amortization

contra asset cr

land

asset dr

building

asset dr

equipment

asset dr

land improvments

asset dr

interest revenue

revenues cr

interest expense

expense dr

common stock/preferred stock/treasury stock

equity cr

APIC

equity cr

Retained Earnings

equity cr

Accounts on the income statement

revenues and expenses

accounts on the balance sheet

assets, liabilities, equity

shareholders

who financial statements are prepared for

historic cost principle

tells us to record our transactions at cost

income statement, retained earnings, balance sheet, cash flow

proper order of financial statements

a=l+e

accounting equation

balance sheet

what the accounting equation represents

left, right

debits, credits

GAAP

rules of accounting in the US

accrual accounting

recording transactions when they occur

internal control system

why we do bank recs

cash

the most liquid account a business owns

bad debt expense

uncollected accounts are written off to this

Fraud triangle

incentive, opportunity, rationalization

FIFO LIFO Weighted Average

three methods of tracking inventory

FIFO

most commonly used to track inventory

historical cost

what we record transactions based on

depreciation/amortization/depletion

the process of allocating the cost of an asset over its useful life.

straight line depreciation

most commonly used method of depreciation allocation

Gross Pay

the total earnings of an employee before any deductions such as taxes or benefits.

net pay

the amount an employee takes home after deductions like taxes and benefits.

APIC meaning

Additional paid in capital

bond

a fixed income investment in which an investor loans money to an entity for a defined period at a variable or fixed interest rate.

dividend

a payment made by a corporation to its shareholders, typically from profits.