General Accounting
What are the two basis of accounting?
Accrual Basis
Cash Basis
This is the book or digital record that contains all of a company’s accounts, summarizing the effects of transactions recorded in the journals.
General Ledgers (T-account)
This financial statement shows Profit/Loss.
Income Statement
Provide service on account for $500.
Debit: A/R $500
Credit: Service Revenue $500
What are the two types of Annuities?
Ordinary Annuity
Annuity Due
Exchange between the company and a separate economic entity.
External Events
This step in the accounting cycle adjusts accounts to record revenues and expenses in the proper period before preparing financial statements.
Adjusting Entries
This financial statement shows a company’s financial position at a specific in time.
Balance Sheet
Company sold merchandise for $1,000 cash. The cost of the merchandise is 10% of selling price. What is the journal entry to record this transaction?
Debit: Cash $1000
Credit: Sales Revenue $1000
Debit: COGS $100
Credit: Inventory $100
What does this credit term means "2/10;n/30"?
2% discount if paid in 10 days or in full within 30 days.
Directly affect the financial position of the company but don't involve an exchange transaction with another entity.
Internal events
The accounts that are closed out at the end of each reporting period is known as?
Temporary Accounts
This financial statement shows how the owner’s capital changes during a period due to investments, net income or loss, and withdrawals.
Statement of Owners Equity
The company estimated that 10% of the A/R $100,000 outstanding balance will be uncollectible. Allowance for doubtful accounts currently has a balance of $5000. What is the amount and journal entry?
Debit: Bad Debts $5,000
Credit: Allowance for doubtful account $5,000
What are the 5 steps in the Revenue Recognition (ASC 606)
1. ID contract
2. ID the performance obligations
3. Determine the transaction price
4. Allocate the transaction price
5. Recognized revenue when or as each performance obligation is satisfied.
What is the accounting equation?
Asset = Liability + Owners Equity
The accounts that are not closed at the end of the accounting period and whose balances carry forward to the next period are classified as what type of accounts?
Permanent Accounts
This financial statement reports a company’s cash inflows and outflows.
Statement of Cash Flows
Alpha Inc. enter into a contract with Beta Inc. to deliver ten (10) $300 AI Chip that have a combined FV of $3,000.
Alpha Inc. delivers the chip on January 1,X7, and Beta Inc. agree to pay Alpha $3,188 on December 31,X7.
What is the journal entry on January 1,X7?
Debit: N/R $3,188
Credit: Discount on NR $188
Credit: Sales Revenue $3,000
What are the two types of arrangement when selling A/R?
With recourse
Without recourse
This type of journal entry involves more than two accounts
Compound Entry
This holding account is used during the closing process to summarize revenues and expenses.
Income Summary
The order for which the financial statements must be prepared in.
1. Income Statement
2. Statement of Owners Equity
3. Balance Sheet
4. Statement of Cash Flows
Alpha Inc. enter into a contract with Beta Inc. to deliver ten (10) $300 AI Chip that have a combined FV of $3,000.
Alpha Inc. delivers the chip on January 1,X7, and Beta Inc. agree to pay Alpha $3,188 on December 31,X7.
What is the journal entry on December 31,X7?
Debit: Cash $3,188
Debit: Discount on N/R $188
Credit: N/R $3,188
Credit: Interest Revenue $188
What are the two methods to account for Sales Discount (variable consideration)?
Gross Method
Net Method