FINANCIAL STATEMENTSFINANCIAL STATEMENTS
Corporation Financial condition is Public information Posted on the internet Posted Quarterly and yearly Company financials:
Posted in the millions or the thousands Financial reports will list which format is used Means rounded to the nearest million If posted as “in the millions” you add 6 zeros
Or multiply amount X 1,000,000
If posted “in the thousands” you add 3 zeros Or multiply amount X 100,000
1
FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS CONTINUED
If posted “in the millions” what is the amount? Cash = $174 Total Assets: $9,735
If posted “in the thousands” Accounts Payable at $729,195 Sales at $5,234,124
$174,000,000$9,735,000,000
$729,195,000$5,234,124,000
FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS CONTINUED
Turn to Page B-4 – B6 in back of textbook. Balance Sheet
Lists Assets, Liabilities and Owner’s Equity
Income Statement (Statement of Earnings) Lists Revenue, Costs, Expenses, and net income
3
FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS CONTINUED
On a piece of paper, answer the following questions: 1. In 2003, how much Revenue did Best Buy Report 2. In 2003, how much Accounts Payable did Best Buy Report 3. Write the Accounting Equation below this and the amount
reported for each. Is the accounting Equation Correct 4. In 2004, how much Revenue did Best Buy Report? 5. Did Revenue in 2004 increase from 2003?
4
FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS CONTINUED
How much did Best Buy Report in Revenue in 2010? Where can I find this data? Yahoo Finance Link
Question 6: How much did Best Buy Report in Revenue in 2009?
Question 7: Did Best Buy report more in Revenue in 2009 in comparison to 2004? If so, how much more?
Question 8: How much in total Assets did Best Buy report in 2004; how much in 2009. Did the company experience considerable growth?
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LESSON 3-1LESSON 3-1
Journals, Source Documents, and Recording Entries in a Journal
TermsTerms
Journal: a form for recording transactions in chronological order (date order) Special amount column: a journal amount column headed
with an account title: General amount column: a journal with two amount columns
in which all kinds of entries can be recorded
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
TermsTerms
Journal: a form for recording transactions in chronological order (date order) Special amount column: a journal amount column headed
with an account title: General amount column: a journal with two amount columns
in which all kinds of entries can be recorded
Journalizing: recording transactions in a journal Entry: information for each transaction recorded in a journal
(can not be entered without a source document) Double-entry accounting: the recording of debit and credit
parts of a transaction
TermsTerms
Source document: a business paper from which information is obtained for a journal (the transaction)
Concept: Objective Evidence: accounting concept applied when a
source document is prepared for each transaction
Date Account TitleDoc No
Post Ref. General Sales Cash
Debit Credit Credit Debit Credit
A GENERAL JOURNA L: has only General Amount Columns
SPECIAL JOURNAL: both special amount and general amount columns
JOURNALSJOURNALS
Type of business and number of transactions determines the type of
journal a business will use.
Journalizing Concepts:Journalizing Concepts:
Transaction information entered in the journal is obtained from source documents:
Transactions must be Accurate In chronological order In Double entry accounting (1 debit, 1 credit)
Types of Source DocumentsTypes of Source Documents
Check: a business form ordering a bank to pay cash from a bank account
Invoice: a form describing the goods or services sold, the quantity, and the price
Sales invoice: an invoice used for recording a sale on account entry
Memorandum: a form on which a brief message is written describing a transaction
Receipt: a business form giving written acknowledgement for cash received
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CHECKS (c)CHECKS (c) page 58
•Pre-numbered for accountability•Written in sequential order•Used to pay cash for something – i.e. bought supplies with cash…..•Both sides completed with check information.•Check stub kept for records •Source Code = (C)
Check Stub
SALES INVOICES (s)SALES INVOICES (s)
What is a Sales Invoice used for? Describes goods or services sold on account
Describes: The date services were sold The quantity and price
AKA sales slip or sales ticket and sales number Source Code = (S)
CASH RECEIVED FROM OWNER and CASH RECEIVED FROM OWNER and PAYMENTS ON ACCOUNT (R)PAYMENTS ON ACCOUNT (R)
Receipt – cash is received from sources other than sales (i.e. received cash on account, investments).
Receipt – cash is received from sources other than sales (i.e. received cash on account, investments).
• Received Cash• Company writes a Receipt• We keep left side• Source Code = (R)• Receipt – Received cash
for payment on account from Supply Depot for $250
CASH RECEIVED FROM SALES (T)CASH RECEIVED FROM SALES (T)
calculator tapecalculator tape • Received cash for sales• One tape per day• One entry for full sales per day• Used when low sales justify no cash
register• Source Code = (T)
MEMORANDUMMEMORANDUM
Memorandum – bought supplies on accountMemorandum – bought supplies on account
• Completed at time of purchase• Source Code = (M)
Important Concepts Important Concepts
When journalizing:•Must be accurate•Must have a source document•Must be in date order (chronological)•Entered in double entry (1 debit, 1 credit)•Permanent record - done in ink (for class use pencil)•Dollar and cent signs not used (cents added, not sign)•Debit entered first, followed by credit, when no special amount column is used•Month on First line only
INVESTMENT FROM OWNERINVESTMENT FROM OWNER
August 1. Received cash from owner as an investment, $5,000.00.
What source document is used when you received cash as an investment?
Receipt (R)
Sales Invoice Checks Receipt Memorandum Calculator Tape
INVESTMENT FROM OWNERINVESTMENT FROM OWNER
August 1. Received cash from owner as an investment, $5,000.00. Receipt No. 1.
1. What two accounts are impacted?
2. Do I have any with special account columns?
3. Write the date in the Date column
4. Account title used for accounts without a special
amount column
5. Enter Kim Parker, Capital in the Account Title and use the General Amount column either debit or credit
5. Write the source document number in the Doc. No. column
6. Enter Cash amount in special amount column
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
INVESTMENT FROM OWNERINVESTMENT FROM OWNER
August 1. Received cash from owner as an investment, $5,000.00.
What source document is used when you paid cash?
Check (c)
Sales Invoice Checks Receipt Memorandum Calculator Tape
August 3. Paid cash for supplies, $275.00.
PURCHASED SUPPLIES WITH CASHPURCHASED SUPPLIES WITH CASH
August 3. Paid cash for supplies, $275.00. Check No. 1.
1. What two accounts are impacted?
2. Do I have any with special amount columns?
3. Write the date in the Date column
4. Account title used for accounts without a special
amount column
5. Write the source document number in the Doc. No. column
6. Complete special amount column
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
Aug 1 Kim Parker, Cap. R1 5 0 0 0 00 5 0 0 0 00
General
Sales Credit
Cash
Date Account TitleDoc
No.
PostRef Debit Credit Debit Credit
Aug 1 Kim Parker, Cap. R1 5 0 0 0 00 5 0 0 0 00 3 Supplies C1 2 7 5 00 2 7 5 00
1. Two Transactions use 2 lines as a result of Special Amount Columns
2. If no special amount columns:- More lines needed- More journal space used - More time to complete transactions
TERMS REVIEWTERMS REVIEW
journal journalizing entry general journal double-entry accounting source document
check calculator tape sales invoice receipt memorandum
WORK TOGETHER 3-1WORK TOGETHER 3-1
General Sales Credit
Cash
Date Account Title Doc No.
Post
RefDebit Credit Debit Credit