fundamenteal accounting notes draft

8/17/2019 Fundamenteal Accounting Notes Draft

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CHAPTER 2: ANALYZING AND RECORDING TRANSACTIONS

Accounting Cycle

A step-by-step process of record!"# c$%ssfy!" %!d s&''%r(!"eco!o'c tr%!s%cto! of % b&s!ess)

Ge!er%tes &sef&$ !for'%to! ! t*e for' of +!%!c%$ st%te'e!ts

,SOPL#SOP#SOCE.

Process (Steps in Accounting cycle)

/) A!%$yse %!d record tr%!s%cto!s &s!" 0o&r!%$ e!tres2) Post 0o&r!%$ e!tres to $ed"er %cco&!ts ,T 1 %cco&!ts.) Prep%re t*e &!%d0&sted tr%$ b%$%!ce3) Prep%re t*e %d0&st!" e!tres re4&red %t t*e e!d of %cco&!t!" perod

5) Prep%re t*e %d0&sted tr%$ b%$%!ce6) Prep%re t*e +!%!c%$ st%te'e!ts ,SOPL#SOCE#SOP.7) C$ose %$$ te'por%ry %cco&!ts ,e") Acc) Rece8%b$es.9) Prep%re post-c$os!" tr%$ b%$%!ce ,Debt sde Credt Sde.

General Ledger

Co!t%!s '%! %cco&!ts ,b%$%!ce %re s*o;! ! '%0or +!%!c%$ st%te'e!ts.

D8ded !to se8er%$ c%te"ores :

I) AssetsII) L%b$tesIII) S*%re Ho$derpe!ses

=I) G%!s?Loss

Accounts

Record of !cre%se?decre%se ! t*e spec+c %cco&!ts ,e") Assets# $%b$tes

%!d etc).

Assets : C%s*# Acc) Rece8%b$e# I!8e!tory# Prep%d E>pe!se# @otor =e*c$es %!d

etc)

Liabilities: Acc) P%y%b$e# !e%r!ed Re8e!&es %!d etc)

Share Holder’s Capital and Revenues

!penses: t$ty# Deprec%to!# A'ort(%to!?P%te!t %!d etc)

PREPARE

TRIAL

BALANCE

POST TO

LEDGER

ANALYZE RECORD

ORNAL

ENTRY


2/30

Accounts’ "ature : I!cre%se? Decre%se t*ro&"* Debt? Credt

Dr)Liabilities Cr)

-

Decre%se

I!cre%se

#ased on the Accounting $uation:

ASSETS LIABILITIES EITIES ,TO BE BALANCED

IN THE SOP.

ASSETS LIABILITIES EITIESCASH

ACC

RECEI=ABLE

EIP@ENTS

PREPAID

EFPEN)

ACC PAYABLE

ACCRED EFPENSE EG)

SALARY PAYABLE

NEARNED RE=ENE

SHARE CAPITAL

DI=IDEND

%& RC&R' %RA"SAC%&"S " G"RAL L'GR (% ACC&*"%) A"'

+&*R"AL

EFA@PLE: Opp% Sd!) B*d bo&"*t an e$uip,ent for R- ./00 cash)

So$&to!s:

C$%ssfy ;*c* %cco&!ts !8o$8ed) , E4&p'e!t ,%sset. %!d C%s* ,%sset. .

Deter'!e ;*c* !cre%se or decre%se , B&y E4&p'e!t I!cre%ses. , P%y

C%s* Decre%ses.

+ournali1e2

Dr) E4&p'e!t /5

Cr) C%s* /5

Dr) Assets Cr)

-I!cre%se

Decre%se

Dr) E>pe!sesCr)

-I!cre%se

Decre%se

Dr) S%$es Re8Cr)

-

Decre%se

I!cre%se


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E4&p'e!t Acc

%!-/ C%s* /5 %!-/ B%$%!ce c?d /5

/5 /5

b%$%!ce b?d /5

C%s* Acco&!t

%!- b%$%!ce b?d 25 %!-/ E4&p'e!t /5

b%$%!ce c?d J /

25 25

eb-

/ b%$%!ce b?d /

3#alance b4d 'e%!s t*e pre8o&s b%$%!ce of t*e c%s* %cco&!t before t*e

p&rc*%se t%Kes p$%ce)

O! t*e / %!# Opp% bo&"*t %! E4&p'e!t for R@/5 C%s*) T*&s# t*e C%s*

Acco&!t ;$$ be CREDITED !dc%t!" t*ere s % 'CRAS ! t*e %'o&!t of

c%s*)

5#alance c4d 'e%!s t*e b%$%!ce of c%s* ATER t*e p&rc*%se t%Kes p$%ce) T*&s

t*s %'o&!t ;$$ be c%rred do;! to t*e !e>t 'o!t* ,e>p$%!!" ;*y t*e b%$%!ceb?d of / o! t*e /st ebr&%ry.

Tr%$ B%$%!ce ,or'%t.

CH SDN) BHD ,!%'e of co'p%!y.

Tr%$ B%$%!ce for t*e ye%r e!ded / Dece'ber 2>>

Acco&!t Tt$e R@ ,Dr. R@ ,Cr.C%s* FAcco&!t Rece8%b$e FI!8e!tores FL%!d %!d B&$d!" FPrep%d E>pe!se FS%$es FS%$es Ret&r! %!d Dsco&!t FP&rc*%ses FP&rc*%ses Ret&r! %!d Dsco&!t F


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Acco&!t P%y%b$e FS*%re C%pt%$s FDr%;!"s FD8de!ds F

t$tes E>pe!se FFF FF

I!co'e St%te'e!t ,SOCI?SOPL?IS.

))N%'e of Co'p%!y))St%te'e!t of Pro+t or Loss for t*e ye%r e!ded /

Dec 2>> R@ R@

S%$es >

,-. S%$es Ret&r! %!d A$$o;%!ce ,>.NetS%$es >>

,-. Cost of Goods So$dO't

Be"!!!" I!8e!tory >

,. P&rc*%ses >,-. P&rc*%se Ret&r! %!dDsco&!t ,>.

Net P&rc*%se >

,-. E!d!" I!8e!tores ,>. ,>>.

Gross I!co'e >>

,. Re8e!&es >

>>

,-. E>pe!sesI!s&r%!ceE>pe!se >

Deprec%to! >

Ad8erts!" >S%$%resE>pe!se > ,>>.Net I!co'e ? Net $oss ,fNe"%t8e. >>

CH SDN BHD


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St%te'e!t of C*%!"es ! E4&ty for ye%r e!ded /

Dece'ber 2>>

R@

Ope!!" B%$%!ce ,%! /. >

,. Net I!co'e?Loss >

,.Addto!%$ C%pt%$s >

>>

,-. D8de!ds. ,>>.

Ret%!ed E%r!!" ,Dec /. >>

o't COGS f t*e Co'p%!y pro8des ser8ces !ot

prod&ctHC Sd!) B*d)

St%te'e!t of !%!c%$ Posto! %s %t / Dece'ber 2>> R@

No! C&rre!t Assets

L%!d >

B&$d!" M NB= >

@otor =e*c$e M NB= >

>>C&rre!t Assets

C%s* >

Acco&!t P%y%b$e >

I!8e!tores >

Prep%d E>pe!se >

Tot%$ Assets # >>

No!-C&rre!t L%b$tes

Lo!" Ter' Lo%! >

C&rre!t L%b$tes

Acco&!t P%y%b$e >

Accr&ed E>pe!ses ,p%y%b$e %cco&!t. >

!e%r!ed Re8e!&e >

>>

E4&ty

S*%re C%pt%$ >

,.Ret%!ed E%r!!" ,Dec /. > Tot%$ L%b$tes O;!ers E4&ty # >>


6/30

J T*ese t;o '&st be t*e s%'e

J Yo& '%y &se t*e T-Acco&!t Co!cept for SOP#

)e) Assets L%b$tes E4&ty

E>ercses


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C*%pter : Ad0&st'e!ts

Ad6ust,ent

• !%!c%$ report!" t*%t corrects %!y 'st%Kes

'%de pre8o&s$y ! t*e %cco&!t!" perod)

Ad6usting Account

• To b%$%!ce t*e %ssets?$%b$tes %cco&!t to tsproper %'o&!t

• 2 types of %d0&st'e!t :

I) P%y or Rece8e C%s* ! %d8%!ce before

e>pe!se or re8e!&e s reco"!(ed ,@%tc*!"

Pr!cp%$.II) P%y or Rece8e c%s* %fter e>pe!se or re8e!&e

s reco"!(ed

Paid4Receive (#7&R) - Prep%d E>pe!se

- !e%r!ed Re8e!&es

,Rece8e ! %d8%!ce.

Paid4Receive (A7%R) - Accr&ed E>pe!se , e") S%$%ry

P%y%b$e.

-Accr&ed Re8e!&e


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!a,ples:

Prepaid !pense

- reso&rces p%d b&t !ot yet rece8e t*ebe!e+t- A! %sset &!t$ yo& *%8e &sed t ,t&r!s

!to oper%t!" e>pe!se.- E>%'p$e: Prep%d I!s&r%!ce

E") A*'%d %!d Co) p%d R@ for I!s&r%!ce ;*c*

co8ers for / ye%r o! t*e /st of No8e'ber 2/) T*e

Co'p%!y c$oses ts %cco&!t o! t*e /st Dece'ber2/) *%t ;$$ be t*e %d0&st'e!t !eeded

Solutions and !planations:

-O! t*e /st No8e'ber 2/# t*e tr%!s%cto!s !8o$8ed

%re Debt t*e Prep%d I!s&r%!ce %!d Credt C%s* R@ ,%ss&'e t*ey p%y c%s*.

-T*&s# t*e %sset ,Prep%d I!s&r%!ce I!cre%ses by

R@.# %!d C%s* ,decre%ses by R@ .)

-O! t*e / Dece'ber 2/# t*e !s&r%!ce *%s co8ered

t*e +rst t;o 'o!t*s of t*e / Ye%r of co8er%"e , / st No8

2/- /st October 2/3.

-So# t*e co'p%!y ,ust ,a8e so,e ad6ust,ent for

t*e prep%d e>pe!se %s t*e oper%t!" e>pe!se

,I!s&r%!ce E>pe!se. *%s bee! !c&rred)

T*e Ad0&st'e!ts I!8o$8ed %s of / Dece'ber 2/

,?/2. > 2

'o!t*s ,No8 %!d

Dec.

DrI!s&r%!ceE>pe!se 5

Cr

Prep%d

I!s&r%!ce 5


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*nearned Revenues

o @o!ey rece8ed ! %d8%!ce

o Ser8ces to be pro8ded ! t*e

f&t&reo Re8e!&e s e%r!ed ;*e! 0ob s

perfor'edo It s % $%b$ty , &!der C&rre!t

L%b$ty#SOP.

E") O! t*e /st Oct 2/3# Gee


10/30

-Pre8o&s$y %s of /st Oct# t*e $%b$ty s !cre%sed by

R@ 5

-As of /st Dece'ber# t*e Gee


11/30

T*e b%$%!ce of R@/ s

reco"!(ed %s %! e>pe!se

T*ey o;e t*e e'p$oyee R@

/

Accrued Revenue

- Re8e!&e e%r!ed b&t !ot yet p%d

%!d recorded

- %! %sset to t*e co'p%!y

E") O! t*e /st No8 2/3# Z&$ *%s re!ted *s b&$d!" to

%+y Co'e$ Sd! B*d for R@ 2 per 'o!t*) T*e re!ts to be p%d o!ce ! 2 'o!t*s b%ss) !fort&!%te$y# %t

t*e e!d of Dece'ber 2/3# %+y Co'e$ Sd! B*d o!$y

%b$e to p%y *%$f of t*e tot%$ %'o&!t)

So# o! t*e /st Dece'ber# Z&$ ;$$ record t*e fo$$o;!"#

Rece8e c%s*# so c%s*

!cre%ses by R@ / Reco"!(e re8e!&e of R@

/

B&t s!ce %+y Co'e$ o;es Z&$ %!ot*er R@/# Z&$

!eeds to '%Ke so'e %d0&st'e!t)

Re!t o;ed to Z&$ ,%! %sset.Reco"!(ed t*e re8e!&e

Supplies

• Co!s&'%b$e te's t*%t *%8e s*orter $fe

sp%!

• StocKed for rec&rr!" &se

Dr S%$%ry E>pe!se /

Cr S%$%ry P%y%b$e /

Dr C%s* /

Cr Re!t /

Dr Re!t Rece8%b$e /

Cr Re!t /


12/30

• A! %sset to t*e co'p%!y &!t$ t s &sed

,e>pe!se.

E") O! %! /st

2/5# N%c*osLbre p&rc*%sed s&pp$es;ort* R@ 55)

T*e co'p%!y recorded t*e p&rc*%sed s&pp$es ! t*e

%sset %cco&!t &!der t*e !%'e S&pp$es Acco&!tQ) At

t*e e!d of t*e %cco&!t!" perod# %fter co&!t!" t*e

s&pp$es# t*ey fo&!d t*%t s&pp$es %t *%!d ;ort* R@

25) *%t s t*e %'o&!t of s&pp$es e>pe!se !c&rred

%!d 0o&r!%$(e t*e tr%!s%cto!s !8o$8ed) Ass&'e t*ey

p%d by c%s*)

O! %!&%ry /st# t*ey bo&"*t t*e s&pp$es# t*&s t*e

s&pp$es !cre%se by R@ 55 %!d t*er c%s* decre%ses

by R@55 ,p%y by c%s*.

Dr S&pp$es 55

Cr C%s* 55

As of Dece'ber /# t*e b%$%!ce of t*e s&pp$es s R@

25) T*&s t*e e>pe!se !c&rred s# Be"!!!" 1 &sed

B%$%!ce#

sed Be"!!!"

1 B%$%!ce

55 125

sed?E>pe!se

!c&rred e>pe!se of

R@S&pp$y ,%sset. red&ced

by R@

Dr S&pp$y E>pe!se

Cr S&pp$y


13/30

S&pp$es Acco&!t %!/st

P&rc*%se 55

S&pp$yE>pe!se

b%$%!ce c?d 25

55 55

%!/st b%$%!ce b?d 25

S&pp$es

E>pe!se

S&pp$es

!ercises


14/30

Chapter 9: Co,pleting the Accounting Cycle

• Reset t*e temporary %cco&!ts b%$%!ce to (ero• se nco,e Su,,ary to s&''%r(e re8e!&es %!d

e>pe!ses !c&rred• I!co'e S&''%ry St%te'e!t Pro+t Loss

Co'pre*e!s8e I!co'e

Steps nvolved

/. Ide!tfy %cco&!ts for c$os!" 1 te'por%ry %!d per'%!e!t

%cco&!ts

o Te'por%ry %cco&!ts , Zero B%$%!ce %t e!d of perod.

/) Re8e!&es

2) E>pe!ses) D8ded3) I!co'e s&''%ry

o Per'%!e!t Acco&!ts: , to be tr%!sferred to SOP.

/) Assets- c%s*# rece8%b$es# etc2) L%b$tes- p%y%b$es# &!e%r!ed re8e!&es) E4&ty 1 S*%re C%pt%$# D8de!ds %!d etc)

2. Record C$os!" E!tres3 steps:

• C$ose credt b%$%!ce ! re8e!&e to !co'e

s&''%ry

• C$ose debt b%$%!ce ! e>pe!se to !co'e

s&''%ry

• C$ose !co'e s&''%ry to Ret%!ed E%r!!"s

,! SOCE.


15/30

• C$ose D8de!d to Ret%!ed E%r!!"s

/) C$ose credt b%$%!ce ! re8e!&e to !co'e s&''%ry

Dr Re8e!&e >> Cr I!co'e S&''%ry >>

2) C$ose debt b%$%!ce ! e>pe!se to !co'e s&''%ry

Dr I!co'e S&''%ry >> Cr E>pe!ses Acco&!t >>

) C$ose I!co'e S&''%ry , Net I!co'e . to Ret%!ed E%r!!"s

Dr I!co'e S&''%ry >> Cr Ret%!ed E%r!!"s >>

3) C$ose d8de!d to Ret%!ed E%r!!"s

Dr Ret%!ed E%r!!"s >> Cr D8de!d >>

te,s in the State,ent o 7inancial Positons (S&7P) and their

categories

Assets L%b$tes %!d E4&tes

C&rre!t AssetsNo!-c&rre!t Assets

Lo!" ter' !8est'e!t

I!t%!"b$e Assets

C&rre!t L%b$tesNo!-C&rre!t L%b$tes

E4&ty

%er,inologies and !planations

Current Assets &sed# so$d ;t*! o!e ye%r

"oncurrent Assets !ot &sed ;t*! o!e ye%r

Current Liabilities ; ob$"%to!s ,debt. d&e ;t*! o!e ye%r


16/30

"onCurrent Liabilities ( Long ter,) debt d&e !ot ;t*! o!e ye%r

$uities o;!er


17/30

C*%pter 5: @erc*%!ds!"

-erchandise Co,pany %'p$es L%; r'# P$&'b!"Ser8ceNet S%$es-Cost of Goods

So$d

Gross Pro+t Re8e!&es

1 E>pe!ses

Net I!co'e

Net I!co'e

C%$c&$%to!

Re8e!&e- E>pe!se Net

I!co'e

-erchandi1er

-erchandising Co,pany

*o$es%$erCo!s&'er Ret%$er@%!&f%ct&re

r


18/30

nventory Syste,

T*ere %re t;o !8e!tory syste' :

• Perpetual ,tr%!s%cto! co!t!&o&s$y

&pd%ted.

• Periodic , tr%!s%cto! &pd%te %t t*e

e!d of %cco&!t perod.

Co,parisons bet=een Perpetual andPeriodic

S'$%rty: bot* &se !8e!tory %cco&!t %!d cost of

"oods so$d %cco&!t

Dere!ces:

Perpet&%$ Perodc-stocKs &pd%ted

co!t!&o&s$y

-p&rc*%ses drect$y

debted to !8e!tory %!d

p&rc*%se ret&r! credted

to !8e!tory

-S%$es %re recorded ! t;o

0o&r!%$# ) s%$es ) co"s

-stocKs &pd%ted be"! %!d

e!d

-p&rc*%ses %cco&!t#

p&rc*%se ret&r! %!d

%$$o;%!ce &sed *ere

-s%$es recorded o!ce

-re4&res c$os!" e!tres to

&pd%te !8e!tory %!d


19/30

co"s)

Perodc Perpet&%$ To record P&rc*%ses of Goods o!

Credt

P&rc*%ses /2I!8e!tory /2

Acc P%y%b$e /2 Acc P%y%b$e /2

To Record P&rc*%seDco&!t

Acc P%y%b$e /2 Acc P%y%b$e /2

P&rc) Ds 23 I!8e!tory 23 C%s* //76 C%s* //76

To record P&rc*%se Ret&r! %!d A$$o;%!ces

Acc P%y%b$e 25 Acc P%y%b$e 25

P&rc* RA 25 I!8e!tory 25

To record re"*t-I!

E>pe!ses

Tr%!sport ! 7I!8e!tory ,%bsorbscost. 7

c%s* 7 c%s* 7

To Record S%$es o!Credt

AccRece8%b$e 2 Acc Rece8%b$e 2

S%$es 2 S%$es M se$$!" prce 2

COGS M cost prce /5

I!8e!tory ,red&ce %'t. /5

To record S%$es Ret&r! %!dA$$o;%!ces

S%$es RA 7 S%$es RA 7Acc

Rece8%b$e 7 Acc Rece8%b$e ,to red&ce. 7

I!8e!tory , p&t b%cK M cost.5

COGS 5

To record S%$esDsco&!t


20/30

C%s* /552 C%s* /552

S%$es Dsc 39 S%$es Dsc 39Acc

Rece8%b$e /6 Acc Rece8%b$e /6

T*ere %re fe; co!cepts !8o$8ed ! record!" tr%!s%cto! for

bot* syste's)

-%rade 'iscount 1 by '%!&f%ct&rer# ;*o$es%$er to oer better

prce for "re%ter

&%!tty p&rc*%sed

-Purchase 'iscount- red&cto! fro' !8oce prce to

e!co&r%"e e%r$y p%y'e!t

2?/# !?-2 'e%!s t*e of dsco&!t

-/ 'e%!s t*e dsco&!t perod ,e!tt$ed t*e dsco&!t ;t*! /

d%ys.

-! 'e%!s ot*er;se !or'%$ prce ,;t*o&t dsco&!t.- s t*e credt perod

%ransportation Cost and &=nership transer

re"*t o! Bo%rd ,OB. S*pp!"

Po!t

re"*t o! Bo%rd ,OB.

Dest!%to! Po!t

O;!ers*p tr%!sferred to

co&rer

O;!ers*p tr%!sfer to b&yer

B&yer be%rs t*e cost Se$$ers be%r t*e costS%$es occ&rs o!ce "oods

re%c* t*e dest!%to!

S%$es occ&r o!ce t*e "oods

$e%8e t*e s&pp$er


21/30

E>ercses

Chapter > and ? : Receivables @ Long %er, Assets

Receivable

Acco&!t Rece8%b$es -U %'o&!t d&e fro' debtor

-Ud&e to Sales on Credit ,!ot yet p%d. -U%ssets to t*e co'p%!y ,! SOP.

Sales &n Credit


22/30

• C&sto'ers *%8e!%'p$e:

Dr Acc Rece8%b$e /5

Cr S%$es /5

Dr C%s* V

Cr Acc Rece8%b$e V


23/30

O! Apr$ 5t*# To!e E>c$ *%d credt c%rd s%$es of R@ 5) T*e fee

s 5 %!d ts c%s* rece8ed ''ed%te$y o! depost)

Apr$ 5t* #

5>5 R@ 25

,e>pe!se.

Ho;e8er# f t*e c%s* s

!ot rece8ed ''ed%te$y# t*e 0o&r!%$ s*o&$d be $Ke t*s:

To record s%$es ;t*

e>pe!se

To record co$$ecto! o! credtc%rd s%$es

#ad 'ebt-!co$$ectb$e debt ,c&sto'er &!%b$e to p%y.

t is an P"S (in S&PL)

- 2 'et*ods for b%d debt

) Drect rte-O 'et*od

) A$$o;%!ce @et*od'irect Brite& ,ethod

E") O! Apr$ 5t*# @%'&! decded t*%t s*e c%!!ot co$$ect R@

25 debt fro' A*'%d)Dr B%d Debt 25

Cr Acc Rece8%b$e-A*'%d 25

I! c%se of debt reco8ery ,debtor decded to p%y b%cK.# 0&st

re8erse t*e tr%!s%cto!)

To reco8er t*e &!co$$ectb$e debt

to

record c%s* co$$ecto!# c%s*

I!cre%ses

Allo=ance ,ethod

At t*e e!d of %cco&!t!" perod# t s e>pected t*%t tot%$ b%d

debts to be re%$(ed)

-D advantages

Dr C%s* 375

Credt C%rd E>pe!se 25

Cr S%$es 5

Dr Acc Rece8%b$e 375 Credt C%rd E>pe!se 25

Cr S%$es 5

Dr Acc Rece8%b$e 375Cr S%$es 375

Dr) AccRece8%b$e 25Cr B%d Debt 25

DrC%s* 25

Cr AccRece8%b$e 25


24/30

) t records t*e est'%ted b%d debt e>pe!se ! t*e perod

;*e! t*e re$%ted s%$es %re recorded)

) t reports Acco&!t Rece8%b$e o! t*e SOP %t t*e est'%ted

%'o&!t to be co$$ected)

E") It s est'%ted t*%t o&t of R@ 5 of credt s%$es# R@5

s est'%ted to be &!co$$ectb$e) o&r!%$(e)

Dr) B%d Debt E>pe!se 5Cr) A$$o;%!ce for Do&btf&$ Acc

,ADA. 5

A$$o;%!ce for Do&btf&$ %cco&!t s % co!tr%-%sset %cco&!t)

It s &sed !ste%d of red&c!" %cco&!t rece8%b$e drect$y s!ce

t*e co'p%!y do !ot K!o; ;*c* c&sto'er ;$$ !ot be %b$e top%y)

O! t*e St%te'e!t of !%!c%$ Posto! ,SOP. ,%ssets e>tr%ct.

Assets

Acco&!t Rece8%b$e 5

,-. ADA?ADD ,5.

Net Re%$(%b$e 8%$&e /5

Brite o bad debt#

-t*e co'p%!y decded t*%t t c%!!ot co$$ect R@ 25 debt t*%t

A*'%d o;ed to t)

Dr) ADA 25

Cr) Acc Rece8%b$e 25

Acco&!tRece8%b$e

b%$ b?d 25 ADA 25

Recovering a #ad 'ebt

A$$o;%!ce for Do&btf&$Acco&!t

Acc Rec25

#ad 'ebt25


25/30

E") %d*$ *%s decded to p%y *s f&$$ R@ %cco&!t ;*c*

pre8o&s$y ;%s ;rtte! o)

) To re!st%te t*e &!co$$ectb$e#

) To co$$ect t*e c%s*

Dr C%s*

CrAcc

Rece8%b$e

sti,ating #ad 'ebt

D ,ethods %. Perce!t of B%$%!ce of Acc Rece8%b$e

,c?d for ADA.

b. Perce!t of S%$es ,Drect$y B%d Debt

E>pe!se.

E" T*e co'p%!y *%s decded to ;rte o R@/2 of %cco&!t

rece8%b$e) It s est'%ted fro' p%st e>pere!ce t*%t 5 of Acc

Rece8%b$e to be &!co$$ectb$e) T*e b%$%!ce of Acc Rece8%b$e s

R@ 25) B%$%!ce of ADA s 5)

Solution# t s %d8s%b$e to ope! % T- Acco&!t to +!d t*e

est'%ted B%d Debt)

) Dr ADA /2Cr Acc Rece8%b$e /2

) 5 > ,25-/2. 65 b%$%!ce c?d of ADA

) T*e 765 ,/265-5.

Percentage o Sales

Dr Acc Rece8%b$e

Cr B%d Debt

A$$o;%!ce for Do&btf&$Acco&!tAccRece

/2 b?d 5

c?d 65B%dDebt 765

/26

5/26

5


26/30

E") Is t est'%ted t*%t 5 of s%$es to be &!co$$ectb$e) T*e tot%$

s%$es s R@ ) !d t*e B%d Debt E>pe!se)

5 > /5

Dr B%d Debt /5

Cr ADA /5

Aging o Receivable &s&%$$y ;$$ be %sKed ! Ob0ect8e&esto!s

/) C$%ssfy e%c* rece8%b$e %ccord!" to *o; $o!" t s d&e2) @&$tp$y e%c* "ro&p by t*e est'%ted b%d debt

) Tot%$ t*e est'%ted b%d debt for e%c* "ro&p

"otes Receivable

% pro'ssory !ote s % ;rtte! pro'se to p%y %

spec+ed %'o&!t of 'o!ey &s&%$$y ;t* !terest# et*er

o! de'%!d or de+!te f&t&re d%te)

Ho= to calculate the interest Revenue and

Receivable

Principal Annual nterest Rate > %i,e in

7raction o Eear)

E") 6 Notes Rece8%b$e of R@ /# ;%s %ccepted o!October /st 2/3) No !terest *%s bee! rece8ed %!d recorded

%t t*e e!d of t*e %cco&!t!" perod# Dec /st

2/3)I!terest Rece8%b$e Pr!cp%$ =%$&e > A!! R%tes > T'e !

fr%cto! of ye%r

/# > 6 > ,?/2. ,Oct &!t$ Dec.

/5

to be !c$&ded ! SOP

%sset

to be !c$&ded ! SOPL

ot*er oper%t!"re8e!&es

DrI!terestRece8%b$e /5

Cr I!terestRe8e!&e /5


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Long %er, Assets

-E>%'p$es $Ke P$%!t# L%!d# B&$d!"# @otor =e*c$e# E4&p'e!t

%!d etc)

-T%!"b$e ! !%t&re# %ct8e$y &sed ! oper%to!s# %!d be!e+t !

t*e f&t&re

-Dec$!!" ! 8%$&e of %ssets o8er ts &sef&$ $fe)

Land

-!ot deprec%b$e# b&t '%y %pprec%te ,re8%$&ed.

Land ,prove,ent s&c* %s c$e%r!" t*e b&s*es# %!d etc

-;$$ be deprec%ted o8er ts &sef&$ $fe

#uilding

-deprec%b$e

-cost of %c4&sto! !c$&des tt$e fees# %ttor!ey fees %!d etc)

-achinery

-deprec%b$e

-cost !c$&des t*e p&rc*%se prce %!y re$%ted cost to oper%te

t

ntangible Assets

-c%!!ot be see! !or to&c*ed

-ts deprec%to! s c%$$ed a,orti1ation

-e>%'p$es copyr"*t# p%te!t# fr%!c*ses)

'epreciation-t*e process of %$$oc%t!" t*e cost of %! te'# to e>pe!se ! t*e%cco&!t!" perod be!e+t!" fro' ts &se

-S'p$y p&tF 'epreciation is the reduction o the value o

assets over ti,e

it is an P"S in S&PL

7actors in Co,puting 'epreciation-cost


28/30

-resd&%$ 8%$&e

-&sef&$ $fe

'epreciation -ethod

-Str%"*t $!e 'et*od ,'ost co''o!.

-Dec$!!" B%$%!ce 'et*od ,'ost co''o!.

-!ts-of-prod&cto! ,co''o! s @C.

G8e!#

Cost /#Resd&%$ =%$&e

Deprec%b$e =%$&e 7

sef&$ $fe

Ye%rs 5-ye%rs

!t #

%. Str%"*t L!e @et*od

R@ /3? ye%r

b. Dec$!!" B%$%!ce @et*od

R@ 2/5 ? ye%r

/# - 5 ye%rs

Cost - Resd&%$=%$&e sef&$

Ye%rs

Dr Dep E>pe!se /3

Cr Acc&'&$%tedDep /3

/# -/3

3

Cost- Acc&'&$%ted Dep

sef&$ Lfe

Dr Dep E>pe!se 2/5

Cr Acc&'&$%tedDep 2/5


29/30

*nitsoProduction -ethod

,/#-.?,#.

)2

Cost per &!t > N&'ber of &!ts prod&ced ! % perod

)2 > 6# R@ /2 ? ye%r Dr Dep) E>pe!se

/2

Cr)

Acc&'&$%ted) Dep /2

'isposals o PlantF PropertyF $uip,ent

/)Co'p%res# Cash


30/30

red&ce.

G%! o! Dspos%$

,Re8e. /

C%s* =S NB=V U , /#-2.

G%! o! Dspos%$ of R@ /

E>ercses

fundamenteal accounting notes draft

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