Module 3 Flashcards
Stock Sale
Financial Statement Entry
Balance Sheet: Cash Asset = Contributed Capital
Income Statement: NOT Revenue
Purchase of inventory on credit (on account)
Balance Sheet: Noncash Assets = Liabilities
Income Statement: NOT expense (because on credit)
Sell inventory purchased on credit (on account)
Balance Sheet: Noncash Assets = Earned Capital
Income Statement: Revenues = Sales, Expenses = cost of sales
Receive cash on credit
Balance Sheet: Cash assets = Liabilities
Income Sheet: NOT revenue (only when earned)
Pay toward account payable
Balance Sheet: (Cash) = (Liabilities)
Income Statement: NOT an expense (recognized when it was incurred)
Pay operating expenses
Balance Sheet: (Cash Asset) = (Retained Earnings)
Income Statement: Expense
Pay cash for income taxes
Balance Sheet: (Cash Asset) = (Earned Capital)
Income Statement: Expense
Pay cash to purchase current assets
Balance Statement: (Cash Asset) = Noncash Asset
Income Statement: NOT an expense (until consumed)
Pay cash for property, plant and equipment (PPE)
Balance Sheet: (Cash Asset) = Noncash Asset
Income Statement: NOT an expense
Pay cash for dividends
Balance Sheet: (Cash Asset) = (Retained Earnings)
Income Sheet: NOT a liability
Receive cash in investment income
Balance Sheet: Cash Asset= Retained Earnings
Income Statement: (Expense), NOT a revenue because it is not earned
Receive cash from accounts receivable
Balance Sheet: Cash Asset = (Noncash Asset)
Income Statement: NOT revenue (not earned)
Receive cash in advance for consulting services
Balance Sheet: Cash Assets = Liabilities
Income Statement: NOT a revenue (not earned until consulting services performed)
Perform consulting services after paid in advance
Balance Sheet: (Liabilities), Retained Earnings
Income Statement: Revenues
Accounting Cycle
- Analyze transactions and prepare entries
- Prepare accounting adjustments
- Prepare financial statements
- Close the books
