Accounting- Balance Sheet

where do it go?

Accounting Equation

Assets = Liabilities + stockholder’s equity

Unearned Revenue

Liability (credit normal)

Revenue

Revenue (credit normal)

Retained earnings

Shareholder’s equity (credit normal)

Rent expense

Expense (debit normal) 

Property, plant, and equipment

Asset (debit normal)

Prepaid rent

Asset (debit normal)

Note receivable

Asset (debit normal)

Inventory

Asset (debit normal)

Interest revenue

Revenue (credit normal)

Interest receivable

Asset (debit normal)

Goodwill

Intangible asset (debit normal)

Depreciation expense

Expense (debit normal)

Cost of goods sold

Expense (debit normal)

Common stock

Shareholder’s equity (credit normal)

Cash

Asset (debit normal)

Bad debt expense

Expense (debit normal)

Allowance for Doubtful Accounts

Contra ASSET (credit normal)

Accumulated Depreciation

Contra ASSET (credit normal)

Accounts receivable

Asset (debit normal)

Accounts payable

Liability (credit normal)

Closing journal entry

Close all temporary accounts (revenues and expenses) take remainder and credit or debit retained earnings. 

Total assets

Assets – Contra Assets

Net assets

Net assets = Total Assets – Total Liabilities

What has no effect on total assets, total liabilities, or total stockholders’ equity?

Buying an asset for cash

Recorded in footnotes

Reasonably possible or reasonably estimable

Recorded in accounts

reasonably probable and reasonably estimable

Interest expense

Expense (debit normal)

Bond payable

Liability (credit normal)

Discount on bond payable

Contra Liability (debit normal)

Premium on bond payable

Negative contra liability (credit normal)

Net book value

face value minus discount or plus premium

Additional paid-in capital

Stockholder’s equity (credit normal)

Treasury stock

Contra stockholder’s equity (debit normal)

Cash dividends

Contra stockholder’s equity (debit normal)

Operating activities

Cash earned from sales and lost from expenses

Investing activities

cash receipts from selling or purchasing plant assets, intangible assets, and securities

Direct method is used by

Measures investing and financing cash flows (5% of companies will use for operating)

Indirect method is used by

measures 95% of companies’ operating cash flows

direct method

add increases to cash, subtract decreases from cash

indirect method

reconcile net income backwards to change in cash

Net Cash Flow from Operating Activities

Net Income + Depreciation Expense add/subtract Adjustments for Changes in Working Capital

Additional paid-in capital

Stockholder’s equity (credit normal)