Midterm Review Accounting I

CHAPTER 1 Starting a Proprietorship

THE ACCOUNTING EQUATION Lesson 1-1, page 7

RECEIVING CASH Transaction 1 August 1. Received cash from owner an an investment, $10,000.00. Lesson 1-2, page 9

PAYING CASH Transaction 2 August 3. Paid cash for supplies, $1,577.00. Transaction 3 August 4. Paid cash for insurance, $1,200.00. Lesson 1-2, page 10

TRANSACTIONS ON ACCOUNT Transaction 4 August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Transaction 5 August 11. Paid cash on account to Ling Music Supplies, $1,360.00. Lesson 1-2, page 11

CHAPTER 2 Starting a proprietorship: Changes that affect owner’s equity

REVENUE TRANSACTIONS Transaction 6 August 12. Received cash from sales, $325.00. Transaction 7 August 12. Sold services on account to Kids Time, $200.00. Lesson 2-1, page 26

BALANCE SHEET PREPARATION 1 2 3 4 6 5 7 8 Lesson 2-2, page 30

CHAPTER 3 Analyzing Transactions into debit and credit parts

PAID CASH FOR AN EXPENSE August 12. Paid cash for rent, $250.00. 2 2 1 4 3 1 1. Rent Expense and Cash are affected. 4 2. Cash is an asset. Rent Expense is an expense account that affects owner’s equity. 3 3 3. Assets are decreased. Owner’s equity is decreased; expenses are increased. 4. Rent Expense is debited. Cash is credited. Lesson 3-3, page 53

CHAPTER 4 Journalizing Transactions

Encore Music Uses five source documents Journal Source Documents CONCEPT: Objective Evidence When a source document is prepared for each transaction. Encore Music Uses five source documents Checks Sales invoices Receipts Calculator tape memorandums

STEPS- JOURNALIZING Step 1: Date-write the date Step 2: Debit Step 3 Credit Step 4 Source Document

PAID CASH FOR SUPPLIES 1 2 4 3 1. Write the date. 2. Debit Supplies. 3. Credit Cash. 4. Write the source document number. Lesson 4-1, page 70

PAID CASH FOR INSURANCE August 4. Paid cash for insurance, $1,200.00. Check No. 2. Cash Prepaid Insurance 1. Which accounts are affected? Prepaid Insurance Cash Debit Normal Balance 1,200.00 2. How is each account classified? Prepaid Insurance is as asset account. Cash is as asset account. ↑ 3. How is each classification changed? Assets are increased. Assets are decreased. Debit Normal Balance 1,200.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 4-2, page 72

PAID CASH FOR INSURANCE (continued) August 4. Paid cash for insurance, $1,200.00. Check No. 2. 2 3 1 4 1. Write the date. 2. Debit Prepaid Insurance. 3. Credit Cash. 4. Write the source document number. Lesson 4-2, page 72

BOUGHT SUPPLIES ON ACCOUNT August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Memorandum No. 1. 1. Which accounts are affected? Supplies Accounts Payable—Ling Music Supplies Supplies Accts. Pay.—Ling Music Supplies Debit Normal Balance 2,720.00 2. How is each account classified? Supplies is an asset account. Accts. Pay.—Ling Music Supplies is a liability account. ↑ 3. How is each classification changed? Assets are increased. Liabilities are increased. Credit Normal Balance 2,720.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Liabilities increase on the credit side.

BOUGHT SUPPLIES ON ACCOUNT (continued) August 7. Bought supplies on account from Ling Music Supplies, $2,720.00. Memorandum No. 1. 2 1 4 3 1. Write the date. 2. Debit Supplies. 3. Credit Accounts Payable—Ling Music Supplies. 4. Write the source document number.

RECEIVED CASH FROM SALES (continued) August 12. Received cash from sales, $325.00. Tape No. 12. 3 1 4 2 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 76

SOLD SERVICES ON ACCOUNT (continued) August 12. Sold services on account to Kids Time, $200.00. Sales Invoice No. 1. 2 1 4 3 1. Write the date. 2. Debit Cash. 3. Credit Sales. 4. Write the source document number. Lesson 4-3, page 77

RULING A JOURNAL PAGE 1 5 2 3 4 1. Rule a single line. 2. Write the date. 3. Write Carried Forward. 4. Write each column total. 5. Rule double lines. Lesson 4-4, page 83

CHAPTER 5 Posting to a general ledger

RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM Lesson 5-1 1/11/2017 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM Lesson 5-1, page 98

You should make a numbering system for your chart of accounts. A block of numbers is usually assigned to each of the categories that make up the chart of accounts and blank numbers are left at the end for additional accounts to be added in the future. As a part of the accounting cycle, the chart of accounts is used in journal transactions. There are five categories on the chart of accounts. Five Categories on the Chart of Accounts Assets Liabilities Owner's Equity Revenue Expenses https://www.thebalance.com/develop-the-chart-of-accounts-for-your-small- business-392997

CHART OF ACCOUNTS Lesson 5-1, page 99

OPENING AN ACCOUNT IN A GENERAL LEDGER 1 2 1. Write the account title. 2. Write the account number. Lesson 5-1, page 101

POSTING A SECOND AMOUNT TO AN ACCOUNT 2 1 3 5 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Write the account number in the Post. Ref. column of the journal. Lesson 5-2, page 104

CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED Check mark indicates that amounts ARE NOT posted individually. Check marks indicate that general amount column totals ARE NOT posted. Lesson 5-3, page 107

POSTING THE TOTAL OF THE SALES CREDIT COLUMN 2 3 1 5 4 1. Write the date. 2. Write the journal page number. 3. Write the column total in the Credit amount column. 4. Write the new account balance. 5. Return to the journal and write the account number in parentheses. Lesson 5-3, page 108

POSTING THE TOTAL OF THE CASH DEBIT COLUMN 2 1 3 5 4 1. Write the date. 2. Write the journal page number. 3. Write the column total in the Debit amount column. 4. Write the new account balance. 5. Return to the journal and write the account number in parentheses. Lesson 5-3, page 109

JOURNAL PAGE WITH POSTING COMPLETED Lesson 5-4, page 112

CHAPTER 6 Cash Control Systems

BLANK ENDORSEMENT, SPECIAL ENDORSEMENT, AND RESTRICTIVE ENDORSEMENT Lesson 6-1, page 127

COMPLETED CHECK STUB AND CHECK 1 2 7 3 4 8 9 10 11 12 5 6 Preparing check stubs Preparing checks 1. Write the amount of the check. 7. Write the date. 2. Write the date of the check. 8. Write to whom the check is to be paid. 3. Write to whom the check is to be paid. 9. Write the amount in figures. 4. Record purpose of the check. 10. Write the amount in words. 5. Write the amount of the check. 11. Write the purpose of the check. 6. Calculate the new account balance. 12. Sign the check. Lesson 6-1, page 128-129

RECORDING A VOIDED CHECK ✓ 4 1 2 3 5 1. Record the date. 2. Write the word VOID in the account title. 3. Write the check number. 4. Place a check mark in the Post. Ref. column. 5. Place a dash in the Cash Credit column. Lesson 6-1, page 129

BANK STATEMENT RECONCILIATION 1. Date 1 2. Check Stub Balance 2 5 3. Service Charge 3 6 4. Adjusted Check Stub Balance 7 8 5. Bank Statement Balance 6. Outstanding Deposits 9 4 10 7. Subtotal 8. Outstanding Checks 9. Adjusted Bank Balance Lesson 6-2, page 132 10. Compare Adjusted Balances

JOURNALIZING A BANK SERVICE CHARGE 1 2 4 3 1. Write the date. 2. Debit Miscellaneous Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-2, page 134

JOURNALIZING A DISHONORED CHECK November 29. Received notice from the bank of a dishonored check from Learn N Play, $35.00, plus $15.00 fee; total, $50.00. Memorandum No. 55. Cash Accounts Rec.—Learn N Play 1. Which accounts are affected? Accounts Receivable—Learn N Play Cash Debit Normal Balance 50.00 2. How is each account classified? Accounts Receivable—Learn N Play is an asset account. Cash is an asset account. ↑ Debit Normal Balance 3. How is each classification changed? Assets are increased. Assets are decreased. 50.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-3, page 137

JOURNALIZING A DISHONORED CHECK 4 3 1 2 1. Write the date. 2. Debit Accounts Receivable—Learn N Play. 3. Credit Cash. 4. Write the source document number. Lesson 6-3, page 137

ESTABLISHING A PETTY CASH FUND Lesson 6-4 ESTABLISHING A PETTY CASH FUND August 17. Paid cash to establish a petty cash fund, $200.00. Check No. 8. Cash Petty Cash 1. Which accounts are affected? Petty Cash Cash Debit Normal Balance 200.00 ↑ 2. How is each account classified? Petty Cash is an asset account. Cash is an asset account. Debit Normal Balance 3. How is each classification changed? Assets are increased. Assets are decreased. 200.00 ↑ 4. How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. Lesson 6-4, page 141

ESTABLISHING A PETTY CASH FUND 4 3 1 2 1. Write the date. 2. Debit Petty Cash. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 141

REPLENISHING PETTY CASH 4 3 2 1 1. Write the date. 2. Debit Miscellaneous Expense and Advertising Expense. 3. Credit Cash. 4. Write the source document number. Lesson 6-4, page 143

CHAPTER 7 Work sheet for a service business

PREPARING A TRIAL BALANCE ON A WORK SHEET 2 1. Account Titles 1 2. Account Balances 3. Single Rule 4. Add Totals 5. Write Totals 6. Double Rule 3 4 & 5 6 Lesson 7-1, page 157

SUPPLIES ADJUSTMENT ON A WORK SHEET 2 3 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment with a small letter a in parentheses, (a). Lesson 7-2, page 161

PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET 2 3 1 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment with a small letter b in parentheses, (b). Lesson 7-2, page 162

EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET Lesson 7-3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET 1 2 3 1. Debit Balances without Adjustments 2. Debit Balances with Adjustments 3. Credit Balances without Adjustments Lesson 7-3, page 165

EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEET 1 2 3 1. Sales Balance 2. Expense Balances without Adjustments 3. Expense Balances with Adjustments Lesson 7-3, page 166

RECORDING NET INCOME, AND TOTALING AND RULING A WORK SHEET 1. Single Rule 2. Total 3. Net Income 4. Extend Net Income 5. Single Rule 6. Totals 7. Double Rule 1 2 4 5 3 6 7 Lesson 7-3, page 167

CALCULATING AND RECORDING A NET LOSS ON A WORK SHEET 1 3 2 4 1. Single Rule 2. Totals 3. Net Loss 4. Extend Net Loss Lesson 7-3, page 168

CHECKING FOR TYPICAL CALCULATION ERRORS Lesson 7-4 CHECKING FOR TYPICAL CALCULATION ERRORS When two column totals are not in balance, subtract the smaller total from the larger total to find the difference. Check the difference between the two amounts against the following guides. 1. The difference is 1, such as $.01, $.10, $1.00, or $10.00. 2. The difference can be divided evenly by 2. 3. The difference can be divided evenly by 9. 4. The difference is an omitted amount. Lesson 7-4, page 170

CHECKING FOR ERRORS IN THE WORK SHEET Check for Errors in the Trial Balance Column Have all general ledger account balances been copies in the Trial Balance column correctly? Have all general ledger account balances been recorded in the correct Trial Balance column? Check for Errors in the Adjustments Columns Do the debits equal the credits for each adjustment? Is the amount for each adjustment correct? Check for Errors in Income Statement and Balance Sheet Columns Has each amount been copied correctly? Has each amount been extended to the correct column? Has the net income/loss been calculated correctly? Has the net income/loss been recorded in the correct column? Lesson 7-4, page 171

CHAPTER 8 Financial Statements for a proprietorship

INCOME STATEMENT INFORMATION ON A WORK SHEET Lesson 8-1 INCOME STATEMENT INFORMATION ON A WORK SHEET Lesson 8-1, page 182

HEADING OF AN INCOME STATEMENT 1 2 3 1. Name of Company 2. Name of Report 3. Date of Report Lesson 8-1, page 182

REVENUE, EXPENSES, AND NET INCOME SECTIONS OF AN INCOME STATEMENT 1 2 3 4 6 5 7 9 8 11 10 12 14 13 1. Write the name of the first section. 8. Write Total Expenses. 2. Write the title of the revenue account. 9. Record total expenses. 3. Record the balance of the account. 10. Calculate net income. 4. Write the name of the second section. 11. Rule a single line. 5. Write the title of each expense account. 12. Write Net Income. 6. Record the balance of each account. 13. Record net income. Lesson 8-1, page 183 7. Rule a single line. 14. Rule double lines.

COMPONENT PERCENTAGE ANALYSIS OF AN INCOME STATEMENT Lesson 8-1, page 184

INCOME STATEMENT WITH TWO SOURCES OF REVENUE AND A NET LOSS 2. Account Titles 1 3. Revenue Amounts 4. Total of Sales 3 2 5. Total Sales 5 4 6. Net Loss 7. Record Net Loss 6 7 Lesson 8-1, page 185

BALANCE SHEET INFORMATION ON A WORK SHEET Lesson 8-2 BALANCE SHEET INFORMATION ON A WORK SHEET Lesson 8-2, page 187

HEADING OF A BALANCE SHEET 1 2 3 1. Name of Company 2. Name of Report 3. Date of Report Lesson 8-2, page 187

OWNER’S EQUITY SECTION OF A BALANCE SHEET 1 2 3 4 5 6 7 8 9 10 1. Owner’s Equity 6. Total of Assets 2. Account Title 7. Total Liabilities and Owner’s Equity 3. Capital Amount 8. Total of Liabilities and Owner’s Equity 4. Single Line 9. Compare Totals 5. Total Assets 10. Double Lines Lesson 8-2, page 189

OWNER’S EQUITY REPORTED IN DETAIL ON A BALANCE SHEET 1 2 3 4 6 7 5 8 9 1. Beginning Capital 6. Difference 2. Beginning Capital Amount 7. Ending Capital 3. Net Income 8. Current Capital Amount 4. Drawing 9. Total Liabilities and Owner’s Equity 5. Single Line Lesson 8-2, page 190