TRABAJO FINAL_INGLES III | Mind Map

Chapter 1

Introducction to accounting

Accounting files

Public accounting

Private accounting

Accounting statements

Balance sheet

assets, liabilities and owner's equity

Income statement

Net profit or Loss

Basic Accounting principles

business entitie

proprietorship

Corporations

legal entitydivided into shares

Partnership

Accounting equationsandtransactions

the basic elements of the accounting equation

Assets

Liabilities

Owner's equity

Statement of owner’s equity

the changes in the value of owner's equity

Balance Sheet

lists all assets, liabilities, and owner's equity balances as of the last day of the financial period

Income statement.

reports the amount of net income or loss, subtracting expenses from income over a period of time

Chapter 3

Completing the accounting cycle

Matching Revenues & Expenses.

Cash basis.

They are accounting records of income and expenditure but only when cash is received or disbursed

Accrual basis

Is a more precise method of matching revenues and expenses

Journalizing andPosting Closing Entries.

They are the closure of all temporary accounts and the total change is recorded in the owner's capital account

Accounting Cycle

Begins with the analysis of all transactions and their logging in the diary.

They are posted to the general ledger and a trial balance is drawn.

Everything is recorded in the worksheet.

The financial statements are finalized.

Adjustment Process.

Used in an accounting year to correct errors, always done at the end of the accounting period

Work Sheets

Is a collection of important data that is used to determine which adjusting entries must be performed. It also assists in the preparation of financial statements.

Preparing Financial Statements

The results of the income statement are transferred to the statement of owner's equity.

The owner's equity account in the balance sheet is transferred from the statement of owner's equity..

All other balances of the balance sheet are transferred from the work sheet balance sheet columns

Chapter 2

Accounting cycle

Trial balance

list of accounts with their debit or credit balances.

Account

Rules

1.Asset accounts have debit balances and are increased by debits.

2.Liability accounts have credit balances and are increased by credits.

3.Owner's equity accounts have credit balances and are increased by credits

4. Revenue accounts are increased when credited.

5. Expense accounts are increased when debited.

document used to record all similar transactions

Elements

TitleDebit columnCredit column

Right side of the account is the credit side

Left left side of an account is the debit side

Normal Account Balances.

Credit balanes

Liabilities, owner's equity, retained earnings, and revenue accounts

Debit balancer

Assets, drawing, dividends, and expense accounts

Chart of accounts

Assets Liabilities Owner's equity Revenue Expenses

Balance Sheet

Assets

Fixed assets

Property, plant and equipment, investments, patents and trademarks.

Current assets

Cash, notes receivable, accounts receivable, inventories and prepaid expenses

Liabilities

Long-term

Loans beyond one year, notes and bonds

Current

Bank credit outstanding, accounts payable, interest payable, wages payable and taxes payable.

Owner's equity

Income Statement Accounts

expenses or revenues.

Chapter 4

Merchandising enterprise accounting

Entries for purchases transactions accounting entries used to record the purchase and payment of goods.

Purchased with cash

Debit PurchasesCredit Cash

Puruchased on credit

Debit Purchases Credit Accounts Payable

Purchased on credit, but are paid back early due to a cash discount incentive

Debit Accounts PayableCredit CasCredit Purchases Discount debit Accounts PayableCredit CashCredit Purchases Discount

Purchases returns and allowances rules

If merchandise is returned or a price adjustment is necessary: debit Accounts Payable and credit the Purchases Returns and Allowances account.

Sales Accounting.

The sales account should be credited if goods are sold for cash or on credit

For the advance payment a discount incentive must be given

All sales discounts, returns, and allowances reduce sales revenues.

Rules for recording sales transactions.

3.If they are sold through a credit card, there will be a service fee. In that case they are debited to cash and card collection fees credit and credit accounts receivable.

1.If they are sold on credit, accounts receivable and credit sales are debited

2.If payments are made in cash, cash and credit accounts are debited

Recording Sales Discounts

If a cash discount is taken advantage of, the cash and sale discount and accounts are credited by cash

Sales Accounting.

Manufacturers and wholesalers reduce list prices by allowing commercial discounts

Trade discounts allow flexible pricing without having to print new catalogs

They are not reflected in the accounting records, only the price agreed between a buyer and a seller is recorded

Discounts vary depending on the customer and the size of the order