FINANCIAL STATEMENTS Corporation Financial condition is Public information Posted on the internet Posted Quarterly and yearly Company financials: Posted

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

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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


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

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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?

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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


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


No.



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


No.


Aug 1 Kim Parker, Cap. R1 5 0 0 0 00 5 0 0 0 00

General

Sales Credit

Cash


No.


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