acct ch4 Flashcards
Current assets
those that will be converted into cash (like accounts receivable, cash), or will be used up within 1 year (supplies, prepaid whatever)
CURRENT ratio
c assets/ c liabilities
Working capital
current assets - current liabilities
Long-term assets (Property, plant, and equipment)
assets to be used in a long time, it lists equipment, land, building accumulated depreciation accounts (contra-assets), and book value.
When calculating the total PPE, you count the book value not the asset $ or the accumulated depreciation
book value
asset $- accumulated depreciation equipment
INCOME STATEMENT
List all revs and expenses, the last expense is miscellaneous and list from largest to lowest expense. Have total expenses
STOCKHOLDERS EQUITY STATEMENT:
3 columns, common stock, retained earnings (all equity) and totals. Needs income statement and can verify if right
BALANCE SHEET and classified one
Needs stockholders equity and RETAINED EARNINGS, classified one is on subcategories of assets and liabilities
Closing entries:
close (transfer) temporary accounts to retained earnings (going back to income statement and stockholders equity statement for this info)
post-closing trial balance
is the last step which proves acct equation true (go back to balance sheet for info) you count the contra-asset account here
effect of closing the revenue and expense account to retained earnings.
What’s the net result and how does that affect the retained earnings?
