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Accounting Journal Entries
Review and Practice Materials

U.S. GAAP Codification Accounting Standards ASC
IFRS Overview IFRS Dictionary Intermediate Accounting
U.S. GAAP by Topic Accounting by Topic U.S. Tax Code by Section


Basics of Journal Entries
 
Example 1:  Financing Activities
 
  

   Owner invested $10,000 in the company.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Assets (Cash) by $10,000 Debit

2

Increase in Owner's Equity by $10,000 Credit

   Journal Entry
 

Debit

Credit

Cash

10,000

Owner's Equity

10,000


   Description of Journal Entry
Owner invested $10,000 in the company.

   Results of Journal Entry
Cash balance increases by $10,000.  --> Increase in Assets
Owner's Equity balance increases by $10,000.  -->  Increase in Owner's Equity
  

Example 2:  Financing Activities
 
  

  
The company borrowed $20,000 from a bank.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Assets (Cash) by $20,000 Debit

2

Increase in Liabilities (Borrowings) by $20,000 Credit

   Journal Entry

Debit

Credit

Cash

20,000

 Borrowings

20,000


   Description of Journal Entry
Borrowed $20,000.

   Results of Journal Entry
Cash balance increases by $20,000.  --> Increase in Assets
Borrowings balance increases by $10,000.  -->  Increase in Liabilities
  

Example 3:  Investing Activities
 
  

  
The company purchased $12,000 equipment and paid in cash.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Assets (Equipment) by $12,000 Debit

2

Decrease in Assets (Cash) by $12,000 Credit

   Journal Entry
 

Debit

Credit

Equipment

12,000

 Cash

12,000


   Description of Journal Entry
Purchased $12,000 equipment in cash.

   Results of Journal Entry
Equipment balance increases by $12,000.  --> Increase in Assets
Cash balance decreases by $12,000.  -->  Decrease in Assets




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Example 4:  Operating Activities
 
  

  
The company purchased $6,000 merchandise (600 units) on credit.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Assets (Merchandise) by $6,000 Debit

2

Increase in Liabilities (Accounts Payable) by $6,000 Credit

   Journal Entry
 

Debit

Credit

Merchandise

6,000

 Accounts Payable

6,000


   Description of Journal Entry
Purchased $6,000 merchandise on credit.

   Results of Journal Entry
Merchandise balance increases by $6,000.  --> Increase in Assets
Accounts Payable balance increases by $6,000.  -->  Increase in Liabilities
  

Example 5:  Operating Activities
 
  

  
The company sold 500 units of merchandise at the price of $11,000.  Customer paid $9,000 in cash at the time of sale.

   Analysis of Transaction
   Note:  This transaction includes both "REVENUE" and "EXPENSE" components.

   (1) REVENUE side

Steps

 

Debit or Credit ?

1

Increase in Assets (Cash) by $9,000 Debit

2

Increase in Assets (Accounts Receivable) by $2,000 Debit

3

Increase in Revenue (Sales) by $11,000 Credit

   (2) EXPENSE side

Steps

 

Debit or Credit ?

1

Increase in Expenses (Cost of Merchandise Sold) by $5,000
($6,000 / 600 units = $10 per unit)
($10 per unit X 500 units sold = $5,000 cost)
Debit

2

Decrease in Assets (Merchandise) by $5,000 Debit


   (1) REVENUE Journal Entry
 

Debit

Credit

Cash

9,000

Accounts Receivable

9,000

Sales Revenue

11,000

   Description of Journal Entry
Sold merchandise at $11,000 price and received $9,000 in cash.

   Results of Journal Entry
Cash balance increases by $9,000.  --> Increase in Assets
Accounts Receivable balance increases by $2,000.  --> Increase in Assets
Sales Revenue account balance increases by $11,000.  -->  Increase in Revenue
  
   (2) EXPENSE Journal Entry
 

Debit

Credit

Cost of Merchandise Sold

5,000

Merchandise

5,000


   Description of Journal Entry
To record the cost of merchandise sold.

   Results of Journal Entry
Merchandise balance decreases by $5,000. --> Decrease in Assets
Cost of Merchandise Sold account balance increases by $5,000. --> Increase in Expense
 

Example 6:  Operating Activities
 
  

  
The company paid $3,500 salaries.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Expenses (Salaries Expense) by $3,500 Debit

2

Decrease in Assets (Cash) by $3,500 Credit

   Journal Entry
 

Debit

Credit

Salaries Expense

3,500

 Cash

3,500


   Description of Journal Entry
Paid $3,500 salaries.

   Results of Journal Entry
Cash balance decreases by $3,500.  --> Decrease in Assets
Salaries Expense account balance increases by $3,500.  -->  Increase in Expenses
  

Example 7:  Operating Activities
 
  

  
The company paid $1,500 rent.

   Analysis of Transaction

Steps

 

Debit or Credit ?

1

Increase in Expenses (Rent Expense) by $1,500 Debit

2

Decrease in Assets (Cash) by $1,500 Credit

   Journal Entry
 

Debit

Credit

Rent Expense

1,500

 Cash

1,500


   Description of Journal Entry
Paid $1,500 rent.

   Results of Journal Entry
Cash balance decreases by $1,500.  --> Decrease in Assets
Rent Expense account balance increases by $1,500.  -->  Increase in Expenses
  
  
  Click here for further analysis of these transactions continues on the next file.
 



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Review of Accounting Topics


Principles of Accounting:  

This section provides study guides for students in the principles of accounting courses or introduction to financial accounting courses. 

  
  
  

Accounting for General Users:  
 
A guide to accounting for users who are interested in understanding accounting reports.  This section explains what users need to know to understand and analyze accounting information provided in the financial statements.  No prerequisite is required to read this section.  

  
  

    Accounting is an information system.

    Users of accounting information

    Financial accounting for external users

    Managerial accounting for internal users

    Statement of Cash Flows provides information about the cash flow of a company.

    Cash flow from operating activities

    Cash flow from investing activities

    Cash flow from financing activities



Intermediate Accounting:  

This section provides study guides for students in the intermediate accounting courses.  Following topics are discussed in this section.

  
  
 

    Depreciation Methods

    Straight Line Depreciation

    Declining Balance Method

    Sum-of-the-years-digits Method

    Accounting for Bonds Payable

    Price of bonds payable

    Discount on bonds payable

    Premium on bonds payable

    Amortization of discount and premium

    Early extinguishment of debts



Advanced Accounting:  

This section provides study guides for students in the advanced accounting courses.  Following topics are discussed in this section. 

  
  


U.S. GAAP by Codification Topic
  
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  
 
International Financial Reporting Standards (IFRS)







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