Search Results for: Financial Accounting
Journalizing Closing Entries for a Merchandising Enterprise
At this point in the accounting cycle, we have prepared the financial statements. Now we do the last part, the closing entries. The videos in the adjusting entry section gave you a preview into this process but we will discuss it in more detail. Accounting Cycle 1. Analyze Transactions 5. Prepare Adjusting Journal Entries 9. Read more »
Seller Entries under Periodic Inventory Method
Companies using the periodic inventory method make no attempt to determine the cost of goods sold at the time of each sale. Instead, they calculate the cost of all the goods sold during the accounting period at the end of the period. We will look at calculating cost of goods sold a little later. Key Read more »
Buyer Entries under Periodic Inventory System
Under periodic inventory procedure, the Merchandise Inventory account is updated periodically after a physical count has been made. Usually, the physical count takes place immediately before the preparation of financial statements. This method is most effective for a company with a small amount of inventory due to the labor required to do a physical count of Read more »
Closing Entries
Let’s review our accounting cycle again. We have completed the first two columns and now we have the final column which represents the closing (or archive) process. Accounting Cycle 1. Analyze Transactions 5. Prepare Adjusting Journal Entries 9. Prepare Closing Entries 2. Prepare Journal Entries 6. Post Adjusting Journal Entries 10. Post Closing Entries 3. Read more »
Adjusting for Deferred Items
Deferred Items Deferred means to postpone or delay items. We will be moving items that have already been record in our books. We will move a liability to revenue or an asset to an expense. The deferred items we will discuss are unearned revenue and prepaid expenses. Unearned revenues are money received before work has Read more »
Preparing a Trial Balance
The following video summarizes what elements are included in a Trial Balance and why one is prepared. The trial balance is the edit phase of our story before we publish the results in financial statements. Accountants use a trial balance to test the equality of their debits and credits. A trial balance is a listing of the Read more »
Journal Entries
Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. This lesson will cover how to create journal entries from business transactions. Journal entries are the way we capture the activity of our business. When a business transaction requires Read more »
Accounts, Journals, Ledgers, and Trial Balance
A business may engage in thousands of transactions during a year. Can you imagine preparing a transaction analysis, like we did in the previous unit, for all of those transactions? It would take a lot of time and the spreadsheet would be large! There has to be a better way to classify and summarize the data Read more »
Account Types
Account Types Transactions can be summarized into similar group or accounts. A company compiles a list of accounts to make the chart of accounts. Need more information about what an account is? Watch this brief video. The video explained that accounts are like file folders. What are some things a company might have? A company Read more »
Types of Businesses and Business Activities
FORMS OF BUSINESS ORGANIZATIONS Accountants frequently refer to a business organization as an accounting entity or a business entity. A business entity is any business organization, such as a hardware store or grocery store, that exists as an economic unit. For accounting purposes, each business organization or entity has an existence separate from its owner(s), creditors, Read more »