1. COB 241
September 5, 2018

2. Adminisration
Tutoring
Group s?
Seating Chart

3. QUESTIONS, ISSUES, UNCERTAINTIES
from the homework?

4. COB 241 – UNIT 3

5. Entity Principle
ASSETS =
EQUITY

6. Entity Principle
ASSETS =
EQUITY

7. Entity Principle
ASSETS =
EQUITY

8. Entity Principle
ASSETS = LIABILITIES + EQUITY

9. Entity Principle Period Principle RESULTS OF OPERATIONS &
FINANCIAL POSITION

10. Entity Principle Period Principle INCOME STATEMENT & BALANCE SHEET
For the period ending (date)
As of (date)
CLOSING DATE

11. Entity Principle Period Principle Matching Principle RECOGNIZE REVENUE
in the period in which it is earned
Period Principle
Matching Principle
INCOME STATEMENT

12. Entity Principle Period Principle Matching Principle RECOGNIZE REVENUE
in the period in which it is earned
Period Principle
RECOGNIZE EXPENSES
in the period in which it is incurred
Matching Principle
INCOME STATEMENT

13. Entity Principle Period Principle Matching Principle RECOGNIZE REVENUE
in the period in which it is earned
Period Principle
RECOGNIZE EXPENSES
in the period in which it is incurred
Matching Principle
INCOME STATEMENT

14. Entity Principle Period Principle Matching Principle RECOGNIZE REVENUE
in the period in which it is earned
Period Principle
RECOGNIZE EXPENSES
in the period in which it is incurred
Matching Principle
INCOME STATEMENT

15. Expense The “using up” of any asset…
… in an attempt to generate revenue.
Notice that “using up” is not the same as “paying” for that usage.

16. ACCRUAL ACCOUNTING

17. Accounts Receivable ASSET
The “RIGHT” to collect money from a customer to whom the business has sold goods or services.

18. Accounts Receivable ASSET
The “RIGHT” to collect money from a customer to whom the business has sold goods or services.
Cato Consultants provided $84,000 of consulting services to its clients. Cato has completed the work, and billed the clients, but has not yet collected any cash.

19. Accounts Receivable ASSET
The “RIGHT” to collect money from a customer to whom the business has sold goods or services.
Cato Consultants provided $84,000 of consulting services to its clients. Cato has completed the work, and billed the clients, but has not yet collected any cash.
Later, the clients pay $60,000 in partial settlement for the bills.

20. Accounts Payable
The obligation to pay a vendor for goods or services provided by that vendor, but not yet paid.

21. CLOSING THE PERIOD Make all adjusting entries
Determine the balance in each account (adjusted trial balance)
Create and Income Statement, netting revenue and expense
Determines the period’s Net Income
MOVE all balances from revenue, expense, gains/losses, distributions, to the RETAINED EARNINGS ACCOUNT
This “zeroes out” the revenue and expense accounts, preparing for the next period.
Prepare the Balance Sheet showing the ending balances

22. CLOSING THE PERIOD Make all adjusting entries
Determine the balance in each account (adjusted trial balance)
Create and Income Statement, netting revenue and expense
Determines the period’s Net Income
MOVE all balances from revenue, expense, gains/losses, distributions, to the RETAINED EARNINGS ACCOUNT
This “zeroes out” the revenue and expense accounts, preparing for the next period.
Prepare the Balance Sheet showing the ending balances

23. Entity Principle Period Principle Matching Principle RECOGNIZE REVENUE
in the period in which it is earned
Period Principle
RECOGNIZE EXPENSES
in the period in which it is incurred
Matching Principle
INCOME STATEMENT
BALANCE SHEET

24. Accrued Interest on Loans
Supplies Inventory
Prepaids
(Insurance, Subscriptions, Rent, Utilities advances)
Unearned Revenue
(advance payment for goods/services to be provided in the future)
Accrued Interest on Loans

25. IN SUMMARY ACCRUAL ACCOUNTING
The Balance Sheet MUST show all the RIGHTS AND OBLIGATIONS of the entity as of the closing date, and Revenue and Expenses must be matched to the PERIOD in which they occur, not when they are paid.

26. HOMEWORK ASSIGNMENT 3 Individual part Group part
Complete before Monday.