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Basics of Accounting

(The Language of Finance)


Devotional
Introduction Video
Discussion of Fundamentals
Basic Accounting Problem
Grade on Neatness Bring Back Problem on
Wednesday
Note: Use a Pencil & Take Good Notes

Business & Accounting


Accounting is the universal language of Business and
Finance.
More CEOs from fortune 500 companies have come up
through the ranks of accounting than from any other area
in business. Currently: 54%
Small businesses and usually fail because of poor
accounting understanding.
Marriages usually fail because of poor financial
management (80% of divorces are $$$$ related.)
If you want to get ahead in business & marriage
determine that you are going to understand accounting
basics.

What do Accountants Account For?


Everything of value!

Terms
Assets: Tangible and Non-tangible resources
of a business that have future value. Usually
sub-classified as follows:

Quick Assets (Liquid Assets)


Cash Petty Cash Receivables - Securities

Current Assets (Turn into cash/use annually)


All the above + Inventories, Supplies

Fixed Assets (Depreciated over several yrs.)


Buildings, Equipment, Natural Resources

Land (Fixed, but never depreciated)


Intangible Assets: Patents, Trademarks, Copyrights

What are your Assets?


Bank Account & Money in your pocket
Car
Clothes
Books
Stocks/Bonds/CDs
Prepaid rent
Computers & Electronic Equip.
Knowledge????
Abilities????

Accounting Term: Liabilities


Other peoples claims against your assets!

What you owe!! Debts!


Classified as:
Current Liabilities (one year debt)

Credit Card Debt, Accounts Payable

Long Term Liabilities

Car, Mortgage, Note Payable

Unearned revenues
Bonds (usually super long term)

What are your liabilities?


School Loan
Car Loan
Credit Card Balance
J.C. Penny Account
BYU-Idaho Amount Due

Capital or Owners Equity


The portion of your assets that you can legally claim.
(Net Assets) What you really own legally.
Assets (minus) Liabilities = Owners Equity (or Capital)
Example (purchased a building for $500,000 with a 10%
down payment ($50,000)

Cost of a building (sales price = Asset amount) $500,000


Less: What you still owe on the building (Liability) $450,000
Equals: Your equity in the building (Capital) or your net worth in
the building. $50,000

Formula universally used in all financial and personal


financial institutions:

Assets = Liability + Owners Equity (Balance Sheet


Equation)
(Resources you have) =(What you owe on them) + (the principle
you have paid on them.)

Owners Equity Account Titles


Single Proprietorship:

Capital

Corporation:

Common Stock (what owners paid in)


Preferred Stock (what owners paid in)
Retained Earnings (profits that the business
keeps in the business)

What is your net worth???


What you have minus what you owe.
What format do we use in business and in
personal finance to show our net worth?

A Balance Sheet Financial Statement


List of Assets (classified by type in accounts)
Compared or balanced with:

List of Liabilities and Owners Equity (classified by type


and in accounts)

Text Book Example Page 660

Example (Simplified)
John Does Business or Personal Records
Balance Sheet
September 10, 2003
Assets:

Current:
Cash at Home
Cash Deposits in Bank

Fixed:
Wardrobe
Equipment
Car

$100
500
2000
1000
5000

Total Assets:

Liabilities:

Current:
Credit Card Payable

Long Term:
Note Payable (on Car)

Total Liabilities
Capital, John Doe:
Total Liabilities & Owners Equity:

$8,600
$500
$2000
$2,500
6,100
$8,600

Other Terms
Temporary Accounts are used in addition to
balance sheet accounts to record changes in
owners equity each reporting period.

Expenses Decrease in owners equity during the


period by using up an asset or a portion of an asset.
(or creating additional liabilities)
Revenue Increase in owners equity during the
period by performing a service or selling an asset.
Drawing or Dividends Decrease in owners equity
due to personal withdrawals by the owner(s).

Income Statement Report


Used to determine the net income or net
loss of an individual or business for a
defined period of time.

Used for marking progress by comparing


months and years
Used by financial institutions for determining
the progress and status of a company or
individuals financial health.
Used by the IRS for determining taxes

Income Statement What does it


contain?
Matches Expenses with Revenues for a specific
period of time. (Only the temporary type of
accounts are on the income statement.) No
Assets/Liabilities
Income Statement accounts are closed out at the
end of the reporting period and started over
again the next period.so comparisons can be
made.
Personal Income Statement sometimes called a
Cash Flow Statement example on page 661

Income Statement Example


Name of Individual or business
Income Statement
For period of time (Month of Sept. 2003)
Revenue:
Income from Job
$500
Income from Pell Grant
2000
Total Revenue:
Expenses:
Clothes Expense
$300
Rent Expense
200
Food Expense
50
Tuition Expense
1200
Misc. Expense
250
Total Expenses:
Net Income for September:

$2500

$2000
$ 500

Pop Quiz Use a Pencil Today


1. Which financial report is a snapshot of the of the
financial status of a business or a family..and is given a
specific date?
2. Which financial report is a moving picture of the
business/enterprise for a period of time?
3. What does a balance sheet balance?
4. What are the two kinds of accounts found on an
Income Statement?
5. On what financial report(s) is the cash account found?
6. What are the three subtitles of a income statement.
(name them in the order they are given on the report)
7. If the bank wanted to know your Net Worth what
report would they ask for?
8. Capital in a corporation is entitled ?
9. Two ways to increase the capital account are?
10. Two ways to decrease the capital account are?

How do individuals or businesses keep track for all


their assets, liabilities, capital, expenses,
revenues. Etc.?

The Accounting Process or otherwise


known as the Accounting Cycle. (also
called the Audit Trail of business.
Based on universally accepted accounting
principles. (Generally accepted
accounting principles)
Double Entry Bookkeeping
Accrual Accounting vs. Cash Accounting
Bookkeeping part of accounting.

Accounting Cycle Start with


financial transactions (you will
need to know these steps!)

Verbs & Nouns for each step


#1 Analyze Source Documents

Check, receipts, invoices, deposit slips, etc.


Decide what accounts they represent

#2 Enter (journalize) data in the journal.

Chronological record of transactions


Book of original entry checks and balances
Two or more accounts entered at cost

Make a Journal Required

Accounting Cycle
#3 Post from the journal to the individual
ledger accounts. (to keep a running balance of
each account)

Ledger divided up into these different accounts:


Assets (100 accounts)
Liabilities (200 accounts)
Capital/Owners Equity (300 accounts)
Revenues (400 accounts)
Cost of Goods Sold (Expense) (500 accounts)
General Expenses (600 accounts)

Make some ledger accounts - required

Accounting Cycle #4
Adjust the necessary accounts to bring
them up to date.

Requires internal transactions


Requires journal entries & posting as well
Example: Maybe some of your Supplies
valued at $500 when you bought them have
been usedyou need to bring their value up
to date and expense what has been used.
Example: Depreciation of Equipment

Accounting Cycle #5
#5 At the end of the period or at any time
(with computers) balance all of the
accounts in a trial balance. (Checks and
balance step to see if all of your journal
entries and posting was correct.)

The trail balance is a list of all of your accounts


with balances.
The total of the debit balances must equal the
total of the credit balances.

Make a Trial Balance - Required

Accounting Cycle #6 & 7 & 8


#6 Prepare the Financial Statements

Income Statement
Statement of Changes in Owners Equity
Balance Sheet

Make Financial Statements - Required


#7 Close out all the temporary accounts to
zero, so that you can start a new period/cycle.

Requires journal entries and postin gs

#8. Analyze your financial findings.

The Balance Sheet and Debits and Credits


Balance Sheet Equation

A = L + OE

Use of another checks & balance method

Debits and Credits are terms used to increase or


decrease various accounts and show balances.
All Accounts have either a debit or credit balance.
Assets/Expenses/Withdrawals have debit balances
Increased by debiting and decreased by crediting

Liabilities, Capital, and Revenues have credit


balances.
Increased by crediting, and decreased by debiting

Assets
Cash
Debit
+
100
75

Credit
50 100

Liabilities
A/P
Debit
-

Credit
+

O.E.
Capital
Debit
+

Credit
-

-Drawing -Expense +Revenue

Dr
+

Cr
-

Dr
+
50

Cr
-

Dr
-

Cr
+
75

Each Transaction in finance has a debit and a credit. The debit amount must
always equal the credit amount. (Checks & Balances)
Example: Invested 100 Cash in my business.
Example: Paid $50 for Advertising Expense.
Example: Earned $75 for performing services
At the end of the day: (Assets = 125) = (Liabilities = 0) + (OE = 125) and
debits = 225 and credits = 225 (Double balance, double witness)

Quiz Preview Review with Partner


1-2. Give the accounting equation and define each element in the equation.
_____________________________ = _________________________ + ______________________
Define:_________________________

_______________________

______________________

3. Accounting is called the _____________________________________ of business.


4-7. Name these two statements (The Trial Balance is not a Statement) used in accounting which are used
by managers to make financial decisions (the ones completed in your accounting project) What type of
accounts are on each statement?
First Statement Prepared_____________________________________________________________
Types of accounts found on this
statement._______________________________________________
Last Statement Prepared___________________________________________________________
Two accounts found on this statement?
__________________________________________________
8-12. Give the verbs and nouns of the Six first steps in the accounting cycle: (fill in the blanks)
Verb
Noun
1.)
_________________________________
_________________________________
2.)
_________________________________
_________________________________
3.)
_________________________________
_________________________________
4.)
____Adjust _______________________
____Internal Accounts_______________
5.)
_________________________________
_________________________________
6.)
_________________________________
_________________________________

Accounting Quiz - Continued


13. If the accountant wanted to know the balance of cash currently owned by the
business he would go to the:
______________________________________________________
14. If the accountant wanted to know what type of transaction happened on a specific day
he would go to the:
______________________________________________________
15. The report that determines the net profit or loss of a business for a specific period of
time is called the:
______________________________________________________
Credit Debit Matching
16. ______Increase to Assets when recorded in the journal are:
17._______Increase to Liabilities when recorded in the journal are:
18. _______Increase to Expenses when recorded in the journal are:
19._______Asset accounts carry what kind of balances:
20._______Revenue accounts carry what kind of balance:

A. Debit(s)
B. Credit(s)
C. Can be either Dr or Cr.
D. Always both Dr & Cr

Quiz Last Page


21. What does ROI stand for in finance/accounting? _____________
__________ ______________________
22. What is the Separate Entity
Principle_______________________________________________________
23. Net Income is added to what account in the Statement of Owners
Equity__________________________
24. In what two ways can you decrease the Capital Account?
_________________ _____________________
On the Back
25-26. Draw/format the ledger account for cash (only) with a beginning balance
of $2000 and post the following two transactions in the account that occurred
today. (You do not need to make any journal entries.)
A. Received $5000 into the business from a personal investment from the
owner of the business.
B. Paid out $1000 to employees in wages.
27-30. Format the April Income Statement for Ace company that has these
accounts: (You may not need to use all of the accounts): Cash: $100, A/P
$50, Service Revenue: $500, Sales Revenue: $1000, Cost of Goods Sold
Expense: $400, Advertising Expense: $100, Misc. Expense: $300,
Wages Expense $200, A/R: $300.

The best way to learn:


Complete a simplified practice set that
covers the entire accounting cycle.
Work in partnership with another student
and the teacher. Use a pencil!
Final product: Do your own set of
personalized financial statements.
Problem due on Friday 1/16/04. Quiz over
the accounting language and Accounting
Cycle on Friday.

Separate Entity Principle


(Keep your business records separate
from you personal records)
Lets start a home cleaning business.
First Transaction on 1/1
Pull $1,000 savings out of your personal
account and put it into your business account.
Assets
= Liabilities + Owners Equity
Cash
=
0
Capital
1,000
1,000

Record in Daily Journal


Date

Entries

PR

DR

Cash
101
$1000
Capital
301
Started business with personal investment.

CR Pg1

1/1

$1000

Posting to the Ledger Accounts:


Post $1000 as a debit to the cash account
Post $1000 as a credit to the capital
account
Cash 101
Date
Explanation
1/1
Capital 301
1/1

PR DR
J1 $1000

J1

CR

BAL
$1000

$1000

$1000

2 Transaction
nd

Acquire a Loan of $5,000 to buy


equipment and materials to start a
cleaning business.
Assets
= Liabilities + OE
Cash
Loan Payable Capital
$6,000
$5,000
$1,000
($1,000 + $5,000)
$6000
=
$6000

Journal Entry
Date Explanation

1/2

PR

Cash
101
Loan Payable 201
Received cash on credit.

DR

CR

$5000
$5000

Posting
Cash (101)

Date Explanation
1/1
1/2

PR
J1
J1

DR CR BAL
1000
1000
5000
6000

Loan Payable (201)

Date Explanation
1/2

PR
J1

DR

CR BAL
5000 5000

3 Transaction Jan 3rd


rd

Purchased Equipment (Vacuum, Carpet


Cleaner, Floor Polisher etc.) Cost: $3,000
Assets = Liabilities + OE
Cash
Loan Payable + Capital
Equipment
Accounting Equation Stays in Balance:
Cash = $3000
= $5000 + $1000
Equipment = $3000

Journal Entry
Date

1/3

PR Dr
Equipment
Cash

120

Cr___

$3000

101

Used cash to purchase equipment

$3000

Posting to the Ledger Accounts


Cash

Date
1/1
1/2
1/3

101
PR
J1
J1
J1

Dr
1000
5000

Cr

3000

Equipment

Date
1/3

Bal___
Bal
1000
6000
3000

120
PR
J1

Dr
3000

Cr

Bal__
3000

Pop Quiz Are you ready?


1. Give the accounting equation and define each element.
2. What is the separate-entity principle?
3. Give the first three steps in the accounting cycle using verbs and nouns.
4. When a family or a business does something to change their financial
picture or position it is called what?
5. What are the two financial statements discussed in class and what type
of accounts are on each.
6. When we increase an asset what do we say in terms of debits and
credits? How about a liability?
7. What are the temporary accounts used in financial management?
8. What kind of a balance do the following accounts carry:?

Assets

Expenses

Revenues

Liabilities

Capital

Drawing

9. Format a balance sheet and income statement.


10. What do the following terms mean? ROI, Liquidity, Profit, Goodwill

4 Transaction 1/4
th

Paid $200 for full page ad in the


Newspaper.

Journal Entry
Date
PR
1/3 Advertising Expense 601

Cash
101
Purchased ad for business

Dr
200

Cr
200

Postings
Advertising Expense

Date
1/4

601
PR
J2

Dr
200

Cr

Cash

Date
1/1
1/2
1/3
1/4

Bal______
Bal
200

101
PR
J1
J1
J1
J2

Dr
Cr
1000
5000
3000
200

Bal___
Bal
1000
6000
3000
2800

5 Transaction 1/5
th

Had my first cleaning job for $400. Was


paid $100 down with the rest due at the
end of the month.

Journal Entry
Date
PR
Dr
1/5 Cash
101
100
A/R
110
300
Revenue 401
Performed services and received
down payment. Bal due: 1/31

Cr

400

Postings
Cash

Date

1/1

1/2

1/3

1/4

1/5

101
PR
J1

Dr
1000

Cr
Bal___
Bal
1000
J1
5000
J1
3000
J2
200
100
2900

J2

Accounts Receivable

Date
1/5

PR
J2

Dr
300

Service Revenue

Date
1/5

PR
J2

Dr

6000
3000
2800

110
Cr

Bal___
Bal
300

401
Cr
400

Bal___
Bal
400

Transaction #6 #7#8#9&10
Hired my little brother to help me and paid
him $100 in wages
Worked all day on second cleaning job
and was paid $500
Had to spend $300 on cleaning supplies
to be used during the next two months.
Took $200 out of my business to take my
wife on a mini moon.
Allocated 50% use of my truck to my
business. Book price of truck = $6000

Journal Entries
Date
1/6 Wages Expense
Cash
1/7 Cash
Service Revenue
1/8 Cleaning Supplies
Cash
1/9
Drawing
Cash
1/10 Truck
Capital

PR
620

Debit
100

100

101
101

500
500

401
130

300
300

101
320

200
200

101
150
301

Credit

3000
3000

Postings
Wages Expense
Date
1/6
Cash

Date
1/1

1/2

1/3

1/4

1/5

1/6

1/7
1/8

1/9

PR
J2

PR
J1
J1
J1
J2
J2
J2
J2
J2
J2

Dr
1000
5000

Dr
100

Cr

3000
200
100
100
500
300
200

Cr

101
Bal___
Bal
1000
6000
3000
2800
2900
2800
3300
3000
2800

620
Bal
100

Posting Cont.
Service Revenue

Date
1/5
1/7

401
PR
J2
J2

Dr

Cr
400
500

Cleaning Supplies

Date
1/8

130
PR
J2

Dr
300

Cr

Anderson, Drawing

Bal___
Bal
400
900

Bal_____
300

320

Date

PR

Dr

1/9

J2

200

Cr

Bal______

200

Posting Cont.
Truck

Date
1/10

Capital
1/1
1/10

150
PR
J2

J1
J2

Dr
3000

Cr

$1000
$3000

Bal_____
3000
301
$1000
$4000

Adjustments at the end of the


month Internal Transactions
Step #4 in the Accounting Cycle
Adjusted the cleaning supplies to show
that 33% had been used up.
Adjusted the truck account to show that
one month had been used up.

Truck was expected to last for two more years


$3000/24months = $125 use per month

Journal Entries Adjustments


Date
1/31

Adjustments
Cleaning Supplies Expense
Cleaning Supplies

PR

Dr

621

100

Cr__

100

130

Inventory showed that only $200 in supplies remained


at the end of the month.

1/31
Adjustment
Depreciation Expense/Trk
Truck (Accum Dpr.)

650
151

125
125

Postings of Adjustment Entries


Cleaning Supplies Expense
Date

1/31

Adjustment

PR

Dr

J2

100

Cleaning Supplies

Date
1/8
1/31

1/31

Adjustment

Truck
Date

1/10
1/31

100

Dr
300

J2

Cr
100

Depreciation Expense Truck


Date
PR

Bal

130
PR
J2

Adjustment

621
Cr

J2

Dr

650
Cr

125

Bal_____
300
200

Bal
125

150
Adjustment

PR

Dr

J2

3000

Cr
125

Bal_____
3000
2875

Step # 5 Trial Balance


Account

Debit

Cash
Accounts Receivable
Cleaning Supplies
Equipment
Truck
Loan Payable
Anderson, Capital
Anderson, Drawing
Service Revenue
Advertising Expense
Wages Expense
Cleaning Supplies Expense
Depreciation Expense/Truck

$2800
300
200
3000
2875

Total Balance

$9,900

Credit

5000
4000
200
900
200
100
100
125

$9,900

Step #6 Prepare Financial Statements


Anderson Cleaning Services
Income Statement
Month of January 2004
Revenue:
Service Revenue:
$900
Expenses:
Advertising Expense:
$200
Wages Expense:
100
Cleaning Supplies Expense:
Depreciation Expense:
Total Expenses:
525
Net Income (Loss)

100
125

$375

Return on Cash Investment $375/1000 = 37.5%


Return on Total Investment
$375/4000 = 9.4%
What is our Income Statement Missing???????

Statement of Owners Equity


Andersons Cleaning Business
Statement of Owners Equity
For May 2005
Beginning Capital 5/1/05:
Add: New Investments (truck)
Net Income (from Income Statement)
Less: Drawing (mini-moon)
Net Loss
Ending Capital 5/31/05:

$1000
3000
375
(200)
na
$4175

Balance Sheet
Anderson Cleaning
Balance Sheet
January 31, 2204

Assets:

Cash
Accounts Receivable
Cleaning Supplies
Equipment
Truck
Less Accum. Depr.
Total Assets:

$2,800
300
200
3000
3000
125

2875
$9,175
________

Liabilities

Loan Payable

$5,000

Owners Equity

Anderson, Capital

Total Liabilities & O.E:

4,175

$9,175
______

Sample Quiz Questions


Terms: Assets, Liabilities, Owners Equity,
Capital, Debits, Credits, Accounting
Equation, Ledger, Accounting Cycle,
Posting, Financial Statements, ROI
Seven Steps in the Accounting Cycle?
Verbs & Nouns???
Format an Income Statement/Balance
Sheet? (Given the accounts)
Record and post and business transaction

8 Steps Reviewed
1.
2.
3.
4.
5.
6.

Verb
Analyze
Enter (Journalize)
Post
Adjust
Balance
Prepare

7.
8.

Close
Analyze

Noun
Source Documents
Journal
Ledger
Internal Entries
Trial Balance
Financial Statements
Temporary Accounts
Data

Debits & Credits


Used for checks and balances in Acct.
Must always be equal
Every Transaction has equal debits/credits
Debits increase Assets/Expenses/Drawing
Credit increase Liabilities/Capital/Revenue
Debits decrease Liabilities/Cap/Rev
Credits decrease Assets/Exp/Drawing

Owners Equity
Two ways to increase this account:

1) New investments in the business


Cash Investments
Equipment Investments

2) Revenues earned in the business

Two ways to decrease this account:

1) Expenses (Using assets up to generate a


profit or incurring new liabilities)
2) Taking money out of the business for
personal use.

Debits and Credits


Terms used to increase or decrease an
account and keep everything in balance.
Assets
=
Liabilities + O.E.
Increases
Increases
Increases
(Debits)
(Credits)
(Credits)
Decreases
Decreases Decreases
(Credits)
(Debits)
(Debits)

Steps in the Accounting Cycle


1. Analyze the transaction source documents
and decide what accounts are involved. What
account needs to be increased and what
account needs to be decreased..what
account(s) needs to be debited and what
account(s) need to be credited.
Examples of Source Documents:

Deposit Slips, Invoices, Sales Slips, Contracts,


memos, packing slips, electronic memos, etc.

Source documents are usually kept on file (three


years) as backup for tax and company audits.

Step #2 - Enter source document


data in a chronological journal.
(Data Entry on the Computer)
The Journal is called the book of original entry,
and is on the computer in most companies.

It gives the date of the transaction.


It gives a record of the accounts debited and credited
in the transaction. (the accounts increased or
decreased)
It gives the post reference number of the ledger
accounts involved. (after the transaction has been
posted to the ledger accounts)

Step #3 Post (transfer)


transaction data from the journal to
the individual ledger accounts.
The Ledger Accounts are individual records of
all the assets, liabilities, and owners equity
accounts.
Each Ledger Account is updated daily and keeps
a ongoing record of activity in the account and
balance of the account.
All data that goes into the ledger accounts must
first be put into the journal and then posted from
the journal to the ledger account on the day the
information is journalized.

Step #4 Adjustments
Adjustments are the internal transactions of a
company that a good accountant will make to set
in order each account. They must be journalized
first and then posted to the ledger.
Adjustments are usually made at the end of an
accounting period.
Examples: Depreciation, Use of pre-paid rent
or insurance, interest earned or expensed, use of
supplies and materials, unearned revenues
earned during the period.

Step #5 Trial Balance


Before preparing your statements, make
sure that all of your accounts have the
correct balance.
List of all accounts with debit and credit
balancesDEBITS MUST EQUAL
CREDITS.
If not in balance you must go back in your
audit trail and find your errors.

#6 Prepare your Financial


Statement Income Statement,
Statement of OE, & Balance Sheet
This is the main product of the accounting
system that outsiders/investors/creditors
etc. will look at to see the financial health
of your business.
These statements and how to read them
and create profitability ratios from their
numbers should become second nature to
a business owner, or anyone interested in
finance. This knowledge is essential.

#7 Close all the temporary


accounts and start over.
Close the temporary accounts:

All Expense Accounts


All Revenue Accounts
All Drawing or Dividend accounts.

Transfer the net increases or decreases of these


temporary accounts into the permanent owners
equity account of capital or retained earnings.
This makes it possible for the company to start a
new set of reports to compare with the old etc.

#8 Analyze Data
A list of the accounts you start the new
accounting period with.
A check to see if Debits = Credits with
these continuing accounts.
If total DEBITS DO NOT EQUAL total
CREDITS a mistake has been made and
needs correction.

Final Quiz
1. Define:

Asset:
Liability:
Capital:
Expense:
Revenue:

2. Write out the proper accounting


equation: (formula)

Final Quiz:
3. What is the first accounting book called
that is used to record transactions
chronologically?
4. For any and all transactions Debits
must always equal _______________?
5. If I wanted to know what balance I had
in cash what record/book would I turn to?
6. Cash carries what kind of a balance?

Quiz:
7. The use of a fixed asset over a period
of time is called what?
8. What is ROI and what two figures in
accounting do you use to determine it?
9. The accounting cycle is also known as
the _______________ _____________?

Quiz Last Question


10. Using the following accounts, format in titles
only the Income Statement and the Balance
Sheet. (List titles and total lines were
appropriate.)

Cash,
Accounts Payable,
Accounts Receivable,
Equipment,
Advertising Expense,
Depreciation Expense,
Service Revenue,
Capital

Mondays Assignment
1. Using the Balance Sheet Format, prepare your own
personalized or family Balance Sheet Report listing at least seven
accounts. (Make it neat (with heading) and type it up)
2. Using the income statement format, complete a cash flow
personalized income statement showing all the revenue (money)
you received in January, and the expenses (money) you spent. The
bottom line would be your net profit or net loss for January. Show at
least seven items in this report. Examples of Revenue: (money
from parents) (money from pell grant) (money from savings)
(money earned from work) (money borrowed from roommates)
(money received from loans) etc. Examples of expenses: (money
paid for tuition) (money paid for books) (food) (entertainment)
(utilities) (phone) etc.
Both Reports need to have headings and both need to be in the
format for balance sheet and income statement that we have
learned in class. Both Need to be typed.

Monday
Turn in your neat & complete accounting
problem with three statements.
Be prepared for a quiz on the basics of
accounting.

Know the 8 steps of the accounting cycle.


Know the financial report formats for the income
statement and balance sheet.and the format of a
ledger account. Also debits & credits.

Turn in your personal balance sheets and


income statements for January.