PATERSON FSU ACG 2021 FINAL FORMULAS

Net Income

Revenues - Expenses

retained earnings

net income-dividends

Ending Retained Earnings

beginning retained earnings + net income - dividends

Basic Accouting Equation

Assets=Liabilities-Stockholder's Equity

Stockholders' Equity

common stock + retained earnings

Net cash flow

cash inflows - cash outflows

order of financial statements

I REB C

income statement, retained earnings statement, balance sheet, cash flow statement

Current Ration

current assets/current liabilities

CACL

Liquidity

short term payback (L-S)

Solvency

Long term payback (S-L)

Earnings per Share

net income-preferred dividends/average number of common shares

Working Capital

current assets - current liabilities

Debits

Assests, expenses, dividends

Credits

Revenues, Liabilities, Retained Earnings, Common Stock

Financial Recording Process

source document, journal, ledger, trial balance sheet

Cost of Goods for Sale

Beginning Inventory + Cost of Goods purchased

FOB Shipping

buyer pays

recognized as inventory purchase

Debit Inventory

Credit Cash

FOB Destination

seller pays

recognized as operarting expense

Expense Account "Freight Out"

2/10, n/30

2% discount if paid in 10 days, payment due in full by 30 days

1/10 EOM

1% off if paid within 10 days of next month

Sales Returns and Allowances

contra-revenue account used to record refunds to customers and reductions of their accounts

Sales Discounts

contra-revenue account

Multi Step Income Statement

Gross Profit, Operating Income, Net Income

NetSales-COGS=Gross Profit-Operating Expenses= Income from Operations +/- gains or losses= net income

Gross Profit

Sales Revenue- Costs of Good Sold

Operating Income

Gross Profit- Operating Expense

Net Sales

Sales Revenue- (Sales Returns and Allowances+Sales Discounts)

Periodic Formula

Beginning Inventory (BI)

+Costs of Goods PURCHASED (COG)

-----------------------------------

Cost of Goods Available for Sale (AFS)

-Ending Inventory (EI)

------------------------------------

Cost of Goods SOLD (COGS)

Gross Profit Rate

Gross Profit/net sales

Profit Margin

Net Income/Net Sales

Quality of Earnings Ration

Net Cash from Operating Activities/Net Income

<1=aggressive accounting

>1=conservative accounting

Book Value

Cost of Depreciable Asset-Accumulated Depreciation of Asset

Interest

Face Value of Note%interesttime in term of one year

ex: 6% interest in 1 year of 25,000 note

25,0006%12/12

Annual Depreciation Expense

Depreciable cost/estimated useful life

Depreciable cost

cost of asset-salvage value

Asset Turnover

Net Sales/Average Assets

stockholder's equity statement

paid in capital (PIC), RE, Treasury Stock (preferred), Treasury Stock (common)

Debt to Assets Ratio

Total Liabilities/Total Assets

TLTA

free cash flow

cash from operations-capital expenditures(PPE)-cash dividends

Relevance

Predictive value, confirmatory value, materiality (part of info for business decisions)

Faithful representation

complete, objective, error free (other part of info for business decisions)

Enhancing qualities of info

verifiability, comparibility, consistency, timely, understandability

Monetary unit assumption

only money values in fin statements

going concern assumption

business won't die

periodicty assumption

business uses logical time periods

economic entity assumption

business doesn't pay for personal expenses

cost principal

ppe recorded at cost

fair market value

assets and liabilities reported at fair value

full disclosure prinicipal

state ALL important information

Issuing a Note/Stock

Cash xxxx

Notes Payable xxx

Cash xxx

Common Stock xxx

Purchasing PPE

PPE xxx

Cash xxx

Purchasing Supplies/Inventory

Supplies xxx

Cash xxx

Inventory xxx

Cash xxx

Providing Service for Cash

Cash xxx

Service Revenue xxx

Selling Goods (PERPETUAL)

Cash xxx

Sales Revenue xxx

COGS Expense xxx

Inventory xxx

Selling Goods for Cash (PERIODIC)

Cash xxx

Sales Revenue xxx

Paying Employees

Wage Expense xxx

Cash xxx

Unearned Revenue entry

Cash xxx

Unearned Revenue xxx

Adj Entry.

Unearned Revenue xxx

Revenue xxx

Prepaid Entry

Prepaid Rent/Insurance xxx

Cash xxx

Adj entry

Rent Expense xxx

Prepaid Rent xxx

Supply Entry

Supplies xxx

Cash xxx

adj entry

Supplies Expense xxx

Supplies xxx

Accruing Wages

Wages Expense xxx

Wages Payable xxx

or

Interest Expense xxx

Interest Payable xxx

or

Depreciation Expense xxx

Acc. Deppreciated xxx

Closing Entry

Revenue xxx

Income Summary xxx

Income Summary xxx

Expenses xxx

Net Income Summary xxx

Retained Earnings xxx

Retained Earnings xxx

Dividends xxx

Returning Purchases

Cash xxx

Inventory xxx

Purchase Discount

A/P xxxx

.......... Cash xxx

............. Inventoryxxx

Shipping (FOB SHIPPING POINT)

Inventory xxx

Cash xxx

Net Purchase

Purchase price + Shipping (if freight in) -purchase return- purchase discounts - purchase allowances

Sales Return

Sale Return and Allowance xxx

Cash xxx

Inventory xxx

COGS Expense xxx

Shipping (FOB DESTINATION POINT)

Freight Out Expense xxx

Cash xxx

Inventory cost flow

FIFO

LIFO

WAC

Bad Debt Expense

BDE xxx

Allowance for Doubtful accounts xxx

Write off

ADA xxx

Acounts Receviable xxx

Reinstatement

A/R xxx

ADA xxx

Recovery

A/R xxx

ADA xxx

Cash xxx

A/R xxx

Receiving Note

Note Receivable xxx

Cash xxx

Exchanging account receivable for note receivable

Notes Receivable xxx

Accounts Receivable xxx

Paying off Note

Cash xxxx

Note Receivable xxx

Interest Revenue xxx

Non Paid Note

A/R xxx

N/R xxx

(could be sold to a factor tho)

Straight Line Depreciation

(Cost - Salvage Value)/ useful life

Units of Acitivity Depreciation

Cost - Salvage Value)/ Total # of Units

Double Declining Balance

2/Useful Life) *BV

Depreciation Rate

1/ useful life

Depreciation Entry

Depreciation Expense xxx

Acc. Depreciation xxx

Gain - Sales Price > BV ENtry

Cash xxx

Acc Dep xxx

Equiptment xxx

Gain xxx

Loss- Sales Price < BV

Cash xxx

Acc Dep xxx

Loss xxx

Equiptment xxx

Sales Taxes Entry

Cash xxx

Sales Revenue xxx

Sales Taxes Payable xxx

Salaries Expenses Entry

Salaries Expenses xxx

Federal Income Tax xxx

etc...

PAyroll Taxes Entry

Payroll Expense xxx

FICA xxx

FUTA xxx

SUTA xxx

pay government entry

FED income tax xxx

state income tax xxx

fica payable xxx

futa payable xxx

suta payable xxx

Cash xxx

Interest Payment Entry

Interest Expense xxx

N/P xxx

Cash xxx

Bonds at Discount

Cash xxx

Discount xxx

BOnds Payable xxx

Amortization of Bond Discount Entry

Interest Expense xxx

Discount xxx

Cash xxx

BOnds Issued at Premium

Cash xxx

Premium xxx

Bonds Payable xxx

Amoritization Bond Premium

Interest Expense xxx

Premium xxx

Cash xxx

Discount Bonds before maturity

Bonds Payable xxx

Loss on Bond Redemption xxx

Discount xxx

Cash xxx

(gains are a credit)

Premium Bonds before maturity

Bonds Payable xxx

Premium xxx

Loss on Bond Repedmption xxx

Cash xxx

(Gains are a credit)

Common Shares with Par Value Entry

Cash xxx

Common Stock xxx

APICS - CS xx

Pref Stock w Par Value

Cash xxx

PReferred Stock xxx

APICS - PS xxx

Treasury Stock

Treasury Stock xxx

Cash xxx

Decleration Entry

Cash Dividends xxx

Dividends Payable xxx

Payment Entry

Dividends PAyable xxx

Cash xxx

Per Bank Reconciliation

Unadjusted Balance + Deposits in Transit - Outstanding Checks - Bank Errors

Per Books Reconciliation

Unadjusted Balance + Receivables Collections + Interest Earned - NSF checks - Service fees