Disclaimer: This is a test on how the author will take study notes in the future and testing the lay-out of the website. Please do not use the below information or on this website for any subject matters or for use of examinations. Furthermore, the author is not rendered any service in accounting, taxation or similar professional services.
The Accounting Process
I. The Accounting System
A chart of accounts.
Total assets minus total liabilities.
Real accounts or permanent accounts.
Note: Real accounts are generally balance sheet accounts.
Retain earning account.
Nominal accounts.
Nominal revenue and nominal expense accounts.
Assets minus liabilities equal equity.
Fund theory.
Enterprise theory.
Proprietary theory.
Subsidiary ledger.
II. Accruals and Deferrals
Contract liability (debit) and revenue (credit).
The classification of collected fees that pertain to a future period.
The expense has been paid but not incurred.
III. Journal Entries
An accused expense.
A contract liability.
- Journalization of transactions, events, and other circumstances required to be recognized.
- Posting from the journals to the ledgers.
- The development of an unadjusted trial balance.
- Adjustment to produce an adjusted trial balance.
- Statement preparation.
- Closing.
- Take a post-closing trial balance (optional).
- Making reversing entries (optional).
- Record revenue and expense.
- Adjust expenses(and the related asset or liability accounts) or revenues (and the related asset or liability accounts) to year-end amounts.
- Reflect proper revenues and expenses that have met the recognition and measurement criteria.
When the expense or revenue is recognized prior to the payment or receipt of cash.
When the expense or revenue is recognized after the payment or receipt of cash.
Supplies (debit) and Supplies expense (credit)
IV. Other Comprehensive Basis Of Accounting (OCBOA)
- A basis that the reporting entities use to comply with the requirements or financial reporting provisions of a regulatory agency.
- A basis used for tax purposes.
- The cash basis and modifications of the cash basis have substantial support, such as recording depreciation on fixed assets or accruing income taxes.
- A definite set of criteria having substantial support is applied to all material items.
Certain revenues and expenses are recognized in different reporting periods.
V. Personal Financial Statements
At least a statement of financial condition.
Statement of changes in net worth and comparative financial statements.
Personal statement of cash flow.