FSU- ACG 2021- Exam 1- Notes and Formulas

Accounting Equation

Assets= Liabilities + Equity

Stockholders' Equity=

common stock + retained earnings

Retained Earnings=

revenue - expenses - dividends

Ending Retained Earnings=

beginning retained earnings + net income - dividends

Net Income=

revenues - expenses also = gross profit - operating expenses - other expenses

Net Income using accural basis=

revenue earned - expenses incurred (increases prepaids)

Net Income using cash basis=

cash collected from customers - cash paid for expenses returned (increases prepaids)

Current Ratio=

current assets / current liabilities, used for current liabilities

Debt to Assets Ratio=

total liabilities / total assets, used for long-term liabilities

Book Value=

cost of plant asset - accumulated depreciation

Net Sales=

sales revenue - sales returns & allowances - sales discounts

Gross Profit=

net sales - cost of goods sold

Cost of Goods Sold (COGS)=

beginning inventory + net purchases - ending inventory

Net Purchases=

purchases - purchase returns & allowances - purchase discounts + freight in

Profit Margin Ratio=

net income / net sales

Return on Assets=

net income / average total assets

Ending Contribution Capital=

beginning contribution capital + additional stock

Gross Profit Ratio=

gross profit / net sales

Total Credits=

liabilities + equity + contra assets (accumulated depreciation)

AED (Assets, Expenses, Dividends)

up with debits (left)

ELR (Equity, Liabilities, Revenue)

up with credits (right)

Unearned revenue is a(n)

liability

Cash Basis

recognizes revenue when cash is received

Accural Basis

recognizes revenue when performance obligation is satisfied

Freight Out

seller pays

Freight In

buyer pays

Contra Revenue Accounts

sales discounts, sales returns & allowances

FOB Destination -->

Delivery Expense --> Freight-Out

Prepaid Insurance is a(n)

asset

Trial Balance

Total debits = Total Credits