Financial Accounting

E-Book Overview

Weygandt helps corporate managers see the relevance of accounting in their everyday lives. Challenging accounting concepts are introduced with examples that are familiar to them, which helps build motivation to learn the material. Accounting issues are also placed within the context of marketing, management, IT, and finance. The new Do It! feature reinforces the basics by providing quick-hitting examples of brief exercises. The chapters also incorporate the All About You (AAY) feature as well as the Accounting Across the Organization (AAO) boxes that highlight the impact of accounting concepts. With these features, corporate managers will learn the concepts and understand how to effectively apply them.

E-Book Content

JWCL165_ndx_I1-I10.qxd 9/8/09 9:22 PM Page I-10 JWCL165_ndx_I1-I10.qxd 9/8/09 9:22 PM Page I-10 JWCL165_Front_EP1-EP2.qxd 9/14/09 8:55 AM Page EP1 RAPID REVIEW Chapter Content BASIC ACCOUNTING EQUATION (Chapter 2) INVENTORY (Chapters 5 and 6) Ownership Assets = Liabilities + Stockholders’ Equity ⎧ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎨ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎪ ⎩ Basic Equation Expanded Equation Debit/Credit Effects Assets = Dr. Cr. + – Liabilities Dr. – Cr. + + Common Stock Dr. – + Cr. + Retained Earnings Dr. – Cr. + – Dividends Dr. + Cr. – + Revenues Dr. – – Cr. + Expenses Dr. + Cr. – ADJUSTING ENTRIES (Chapter 3) Ownership of goods on public carrier resides with: Who pays freight costs: FOB shipping point Buyer Buyer FOB destination Seller Seller Freight Terms Perpetual vs. Periodic Journal Entries Type Adjusting Entry Deferrals 1. Prepaid expenses 2. Unearned revenues Dr. Expenses Dr. Liabilities Cr. Assets Cr. Revenues Purchase of goods Inventory Cash (A/P) Purchases Cash (A/P) Accruals 1. Accrued revenues 2. Accrued expenses Dr. Assets Dr. Expenses Cr. Revenues Cr. Liabilities Freight (shipping point) Inventory Cash Freight-In Cash Note: Each adjusting entry will affect one or more income statement accounts and one or more balance sheet accounts. Return of goods Cash (or A/P) Inventory Cash (or A/P) Purchase Returns and Allowances Interest Computation Sale of goods Cash (or A/R) Sales Cost of Goods Sold Inventory Cash (or A/R) Sales No entry End of period No entry Closing or adjusting entry required Event Perpetual Interest  Face value of note  Annual interest rate  Time in terms of one year CLOSING ENTRIES (Chapter 4) Purpose: (1) Update the Retained Earnings account in the ledger by transferring net income (loss) and dividends to retained earnings. (2) Prepare the temporary accounts (revenue, expense, dividends) for the next period’s postings by reducing their balances to zero. Process 1. 2. 3. 4. Debit each revenue account for its balance (assuming normal balances), and credit Income Summary for total revenues. Debit Income Summary for total expenses, and credit each expense account for its balance (assuming normal balances). Cost Flow Methods • Specific identification • First-in, first-out (FIFO) The Fraud Triangle Opportunity Finanical Pressure Debit (credit) Income Summary, and credit (debit) Retained Earnings for the amount of net income (los
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