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 CEO’s 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/CD’s
Prepaid rent
Computers & Electronic Equip.
Knowledge????
Abilities????
Accounting Term: Liabilities
Other people’s 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 Doe’s 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 used…you 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 postings
#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
=
Liabilities
A/P
Debit
-
+
Credit
+
O.E.
Capital
Debit
+
Credit
100
-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
2nd Transaction
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 DR CR BAL
J1 1000
1000
J1 5000
6000
Loan Payable (201)


Date Explanation
1/2
PR
J1
DR
CR BAL
5000 5000
3rd Transaction – Jan 3rd
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___
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
4th Transaction – 1/4
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______
200
101
PR
J1
J1
J1
J2
Dr
Cr
1000
5000
3000
200
Bal___
1000
6000
3000
2800
5th Transaction 1/5
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
PR
J1
J1
J1
J2
J2
Dr
1000
5000
Cr
3000
200
100
Accounts Receivable


Date
1/5
110
PR
J2
Dr
300
Cr
Service Revenue


Date
1/5
101
Bal___
1000
6000
3000
2800
2900
Bal___
300
401
PR
J2
Dr
Cr
400
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___
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___
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
PR
1/31
Adjustments
Cleaning Supplies Expense 621
Cleaning Supplies
130


Dr
Cr__
100
100
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
Cr
J2
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
$2800
300
200
3000
2875

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

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:
Expenses:
Advertising Expense:
Wages Expense:
Cleaning Supplies Expense:
Depreciation Expense:
Total Expenses:
Net Income (Loss)
$900
$200
100
100
125
525
$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
Anderson’s 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
Owner’s 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.
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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
balances……DEBITS 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:
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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:
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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.)
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Cash,
Accounts Payable,
Accounts Receivable,
Equipment,
Advertising Expense,
Depreciation Expense,
Service Revenue,
Capital
Monday’s 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.
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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.