Financial Accounting

0% Complete
0 out of 69 Lessons
0% Complete
0 out of 4 Exams
Previous Lessons
Open Chapter Ch. 1: Basics of Financial Accounting
Lesson #1 Introduction to Financial Accounting
Incomplete Assignment Study Questions for Lesson 1
Lesson #2 Structures of a Business
Incomplete Assignment Study Questions for Lesson 2
Lesson #3 Comparing Internal vs. External Users
Incomplete Assignment Study Questions for Lesson 3
Lesson #4 Business Activities
Incomplete Assignment Study Questions for Lesson 4
Lesson #5 Financial Statements
Incomplete Assignment Study Questions for Lesson 5
Lesson #6 Elements of Financial Accounting
Incomplete Assignment Study Questions for Lesson 6
Open Chapter Ch. 2: Assets, Liability, and Equity
Lesson #7 Assets
Incomplete Assignment Study Questions for Lesson 7
Lesson #8 Liabilities
Incomplete Assignment Study Questions for Lesson 8
Lesson #9 Equity
Incomplete Assignment Study Questions for Lesson 9
Open Chapter Ch. 3: The Double-Entry System and Conceptual Framework
Lesson #10 Accounting Equation
Incomplete Assignment Study Questions for Lesson 10
Lesson #11 Conceptual Framework
Incomplete Assignment Study Questions for Lesson 11
Lesson #12 Double Entry Accounting System
Incomplete Assignment Study Questions for Lesson 12
Lesson #13 Debits and Credits
Incomplete Assignment Study Questions for Lesson 13
Lesson #14 Normal Balances and RED Accounts
Incomplete Assignment Study Questions for Lesson 14
Exam Exam 1
Open Chapter Ch. 4: The Accounting Cycle
Lesson #15 Journalizing and the Accounting Cycle
Incomplete Assignment Study Questions for Lesson 15
Lesson #16 Posting to the General Ledger
Incomplete Assignment Study Questions for Lesson 16
Lesson #17 Trial Balance
Incomplete Assignment Study Questions for Lesson 17
Lesson #18 Adjusting Entries for Accrued Expenses
Incomplete Assignment Study Questions for Lesson 18
Lesson #19 Adjusting Entries for Prepaid Expenses
Incomplete Assignment Study Questions for Lesson 19
Lesson #20 Adjusting Entries for Unearned Revenue
Incomplete Assignment Study Questions for Lesson 20
Lesson #21 Adjusting Entries for Accrued Revenue
Incomplete Assignment Study Questions for Lesson 21
Lesson #22 Adjusting Entries for Amortization and Depreciation
Incomplete Assignment Study Questions for Lesson 22
Lesson #23 Adjusted Trial Balance
Incomplete Assignment Study Questions for Lesson 23
Lesson #24 Preparing the Financial Statements
Incomplete Assignment Study Questions for Lesson 24
Lesson #25 Permanent vs. Temporary Accounts
Incomplete Assignment Study Questions for Lesson 25
Lesson #26 Closing Entries
Incomplete Assignment Study Questions for Lesson 26
Open Chapter Ch. 5: Merchandise Inventory
Lesson #27 Introduction to Merchandise Inventory
Incomplete Assignment Study Questions for Lesson 27
Lesson #28 Periodic vs. Perpetual Inventory Systems
Incomplete Assignment Study Questions for Lesson 28
Lesson #29 Journalizing Purchase Entries
Incomplete Assignment Study Questions for Lesson 29
Lesson #30 Journalizing Sales Transactions
Incomplete Assignment Study Questions for Lesson 30
Lesson #31 Preparing a Multiple-Step Income Statement
Incomplete Assignment Study Questions for Lesson 31
Lesson #32 Periodic Inventory System Purchases
Incomplete Assignment Study Questions for Lesson 32
Lesson #33 Periodic System and the Multiple-Step Accounting System
Incomplete Assignment Study Questions for Lesson 33
Exam Midterm Exam
Open Chapter Ch. 6: Cost Flow Assumptions: FIFO, LIFO, and Average Cost Methods
Lesson #34 Specific Identification Method and Inventory Costing
Incomplete Assignment Study Questions for Lesson 34
Lesson #35 FIFO Method and Inventory Costing
Incomplete Assignment Study Questions for Lesson 35
Lesson #36 Average Cost Method and Inventory Costing
Incomplete Assignment Study Questions for Lesson 36
Lesson #37 The LIFO Method
Incomplete Assignment Study Questions for Lesson 37
Lesson #38 Average Cost Method for the Perpetual System
Incomplete Assignment Study Questions for Lesson 38
Lesson #39 Comparing Inventory Costing Methods
Incomplete Assignment Study Questions for Lesson 39
Open Chapter Ch. 7: Receivables and Bad Debts
Lesson #40 Allowance Method and Uncollectibles
Incomplete Assignment Study Questions for Lesson 40
Lesson #41 The Allowance Method
Incomplete Assignment Study Questions for Lesson 41
Lesson #42 Percentage of Sales Method
Incomplete Assignment Study Questions for Lesson 42
Lesson #43 Percentage of Receivables Method
Incomplete Assignment Study Questions for Lesson 43
Lesson #44 Receivables Method and the Aging Table
Incomplete Assignment Study Questions for Lesson 44
Lesson #45 Write Off Receivables Using the Allowance Method
Incomplete Assignment Study Questions for Lesson 45
Lesson #46 Direct Write-Off Method
Incomplete Assignment Study Questions for Lesson 46
Open Chapter Ch. 8: Revenue Recognition
Lesson #47 Revenue Recognition
Incomplete Assignment Study Questions for Lesson 47
Lesson #48 Revenue Recognition Examples
Incomplete Assignment Study Questions for Lesson 48
Lesson #49 Revenue Recognition and Long Term Contracts
Incomplete Assignment Study Questions for Lesson 49
Lesson #50 Percentage of Completion Method
Incomplete Assignment Study Questions for Lesson 50
Lesson #51 Percentage of Completion Method Journal Entries
Incomplete Assignment Study Questions for Lesson 51
Lesson #52 Percentage of Completion Method and Journalizing Losses
Incomplete Assignment Study Questions for Lesson 52
Lesson #53 Cost Recovery Method
Incomplete Assignment Study Questions for Lesson 53
Lesson #54 Completed Contract Method and Journal Entries
Incomplete Assignment Study Questions for Lesson 54
Lesson #55 Completed Contract Method and Losses
Incomplete Assignment Study Questions for Lesson 55
Exam Exam 3
Open Chapter Ch. 9: Depreciation of Fixed Assets and Gains and Losses
Lesson #56 Depreciation, Amortization and Depletion
Incomplete Assignment Study Questions for Lesson 56
Lesson #57 Straight Line and Declining Balance Methods
Incomplete Assignment Study Questions for Lesson 57
Lesson #58 Straight Line and Double Declining Balance Depreciation Examples
Incomplete Assignment Study Questions for Lesson 58
Lesson #59 Gains and Losses on Disposals of Property, Plant & Equipment
Incomplete Assignment Study Questions for Lesson 59
Open Chapter Ch. 10: Intangible Assets
Lesson #60 Intangible Assets
Incomplete Assignment Study Questions for Lesson 60
Lesson #61 Amortizing Intangible Assets
Incomplete Assignment Study Questions for Lesson 61
Lesson #62 Impairment of Intangible Assets
Incomplete Assignment Study Questions for Lesson 62
Lesson #63 Recording Goodwill, Amortization and Impairment
Incomplete Assignment Study Questions for Lesson 63
Open Chapter Ch. 11: The Indirect Cash Flow Statement
Lesson #64 Preparing a Cash Flow Statement Using the Indirect Method Part 1
Incomplete Assignment Study Questions for Lesson 64
Lesson #65 Cash Flow Statement Using Indirect Method Part 2, Receivables
Incomplete Assignment Study Questions for Lesson 65
Lesson #66 Cash Flow Statement Using Indirect Method Part 3, Inventory
Incomplete Assignment Study Questions for Lesson 66
Lesson #67 Cash Flow Statement Using Indirect Method Part 4, Payables
Incomplete Assignment Study Questions for Lesson 67
Lesson #68 Cash Flow Statement Using Indirect Method Part 5, Non Cash Expenses
Incomplete Assignment Study Questions for Lesson 68
Lesson #69 Cash Flow Statement- Investing and Financing Activities
Incomplete Assignment Study Questions for Lesson 69
Exam Final Exam

Assignments:

Unfinished Assignment Study Questions for Lesson 15

Lesson Objectives:

- Accounting cycle steps
- The steps for analysis and journalizing
- Examples of journal entries
- Real world application



Over the next seven lessons, we will be breaking down the seven different parts of the accounting cycle, starting with journal entries. This lesson will be centered around the first step of the cycle which relies on the analysis and journalizing of financial transactions.
 
The journalizing step is integral to the flow of the remaining steps in the accounting cycle which are depicted in the illustration above. As we move through the accounting cycle, the steps will flow in a clockwise order ending at closing the general ledger account.



Let's review the analysis and journalizing actions by looking at a real-world example of the four steps involved.
 
Analyze the situation - First, we need to understand what situation, if any, is affecting the company's finances. For our example, let's say Bob's Furniture Store is generating sales of patio furniture. This involves the inflow of revenue which they will be receiving in either cash or receivables.
 
Decide which accounts are changing - We need to look at the accounts that are being affected. In the case of Bob's furniture, the patio furniture sales affect the cash or accounts receivable and sales revenue accounts.
 
Determine whether the accounts are increasing or decreasing - For each journal entry, we need to look at whether the account value is increased or decreased as a result of the transaction. The company is receiving an asset of cash or extension of credit to the customer; therefore, the cash or accounts receivable accounts will be increasing. The sales revenue account is also increasing as a result of the patio furniture sales.
 
Journalize the transaction - Follow the double entry accounting system to record the transactions, both the debit and the credit. Since the assets are increasing, we would debit the accounts receivable or cash. The second entry would be to credit the sales revenue as it falls under equity.
 
The graphic above depicts how transactions are recorded based on the type of accounting element involved. The key to applying these steps is to follow the direction the balances are going and accurately record the transaction entries.



Let's review another example in the same step-by-step format and see how it is recorded as a journal entry.
 
What is the situation? - A company is billed for consulting services which is considered an expense as the services were consumed. Instead of paying the funds up front, the company owes the $5,000 as a payable which is a liability because it is due for a future date.
 
Which accounts are changing? - The company is incurring an expense and changing their accounts payable balance.
 
Increasing or decreasing? - The expense account under Stockholders' equity- Retained Earnings section is increasing, the accounts payable under liabilities is also increasing.
 
Journalizing the transaction - First you need to figure out whether the accounts are being debited or credited. As we just mentioned, the expense account is increased, therefore the account would be debited, since an increase in expenses reduces Stockholders' equity. The accounts payable is also increasing, but it will be credited since it is a liability.
 
The financial accounting equation is shown above.



Now, we will look at how the journal entry is recorded by looking at the sample journal entry above.

As you can see, the date is listed on the far-left hand side and beside the date is the list of debited and credited accounts. Normally, the debits are shown first and the credits on the right hand side of the journal entry. In this example, the $5,000 is debited out of the operating expense account and the $5,000 is also credited for the accounts payable account.



Above is another example that shows common account names and types of events or transactions that can occur. There are potentially hundreds or thousands of other account types but for the purpose of introductory accounting, we will use these as a reference.