Journal Entries
Paid monthly rent of $1,500
Dr. Rent expense $1,500
Cr. Cash $1,500
All accounting standards be followed for all items of significant size.
Materiality
Dividends
Temporary
Shareholder's Equity
Where can you find retained earnings?
Shareholder's Equity
Accrued wages for employees of $580
Dr. Wage expense $580
Cr. Accounts Payable $580
or
Dr. Wage Expense $580
Cr. Wage Payable $580
Separates financial information into time periods for reporting purposes.
Periodicity Assumption
Retained earnings
Permanent
Shareholder's equity
What classification would cash be under?
Current Asset
Signed a contract to build a road for $10,000,000
No Entry
Fair value changes subsequent to purchase are not recorded in the accounts.
Historical Cost Principle
Salaries and wages payable
Permanent
Liability
Where is a insurance expenses found on the balance sheet?
No where. Expenses are on the income statement.
Borrowed $13,800 from a bank by signing a note.
Cr. Notes Payable $13,800
Ensures that all relevant financial information is reported.
Full Disclosure principle
Cost of Goods Sold
Temporary
Expense
If liabilities equal $500, and equity equals $1,500 how much do assets equal?
$2,000
Dr. Insurance expense $500
Cr. Prepaid Insurance $500
Personal and business recordkeeping should be separately maintained.
Economic Entity Assumption
Allowance for doubtful accounts
Permanent
Contra-Asset
What is the contra Account for buildings?
Accumulated Depreciation - Buildings