Intermediate Accounting Ch. 3

Assets = Liabilities + Stockholders Equity

1. Listing the account titles and their balances. 2. Toaling the debit and credit columns. 3. Proving the equaity of the two columns.

Deferrals: 1. Prepaid Expenses 2. Unearned revenues
Accruals:
3. Accrued Revenues 4. Accrued Expenses

Expenses paid in cash and recorded as assets before they are used or consumed.

Revenues received in cash and recorded as liabilities before they are earned.

Revenues earned but not yet recieved

Expenses incurred but not yet paid in cash or recorded.

An estimate rather than a factual measure ment of the expired cost. Oct. 31 Depreciation Expense 400 Accum. Depreciation- Equip. 400

Cost- Depreciation

Dr. Liability Account Cr. Revenue Account

Dr. Accounts Recivable Cr. Revenue

Face Value Annual Interest Time in terms of Note X Rate X of one year.

Dr. Expense Cr. Payable

Dr. Bad Debt Expense Cr. Allowance for Doubtful Accounts

1. Revenue > Income Summary
2. Income Summary < Expenses 3. Income Summary > Retained Earnings 4. Retained Earnings < Dividends