Financial Accounting - #1 Ranked University: Course 1 of 5

Define a business and its three core forms—manufacturing, merchandizing, and service—and explain capital needs and the two financing paths: debt and equity.

Examine the general purpose financial statements—balance sheet, income statement, and cash flows—and how generally accepted accounting principles ensure comparability and credibility for investors and creditors.

Define revenues as inflows from selling goods or services and expenses as asset outflows; show net income as revenues minus expenses, illustrated by the Stephen's Sweet Shop example.

Master how to read and prepare financial statements, comparing beginning and end of year balance sheets, income statements, retained earnings, and cash flows using current vs long-term classifications.

Apply the accounting equation to determine assets: with liabilities of 100,000 and owner's equity of 45,000, assets balance at 145,000.

Construct the income statement to calculate net income, starting with sales minus cost of goods sold for gross profit, then subtract operating expenses, interest, and taxes.

Apply the accounting equation to compute beginning retained earnings. With revenue 1500, expenses 1900, net income -400, and dividends 200, ending retained earnings 700, beginning retained earnings are 1300.

Apply the accounting equation by using changes in assets, liabilities, and owner's equity to solve for revenues and net income, with careful attention to signs and back-substitution for accuracy.

Learn to analyze and record business transactions using debits and credits, building journal entries that impact assets, liabilities, and owners' equity, including cash, revenues, expenses, and dividends.

Post journal entries to the general ledger to summarize transactions by assets, liabilities, and owners' equity accounts using debits and credits; computers automate this, while manual posting teaches the process.

Record the cash payment by debiting accounts payable and recording inventory purchases, while crediting cash to reflect outflows and reducing liabilities.

Record two journal entries for a sale: recognize revenue with a credit to sales revenue and cash or accounts receivable debit, then debit cost of goods sold and credit inventory.

Explore how accrual basis accounting uses the revenue recognition and matching principles to recognize revenues when earned and expenses when incurred, contrasting with cash basis timing.

Explore adjusting entries, including prepaid expenses and unearned revenues, and apply the matching and revenue recognition principles to accrual basis accounting with concrete examples.

Classify each account as asset, expense, liability, or revenue and apply debit versus credit balance rules; conclude that total debit balances equal 29,200.

Classify accounts into assets, liabilities, and owner's equity to prepare an income statement. Compute net income by subtracting COGS and operating expenses from revenues, yielding a net loss of 370.

Classify accounts as assets, liabilities, and equity, identifying accounts payable, long-term debt, and unearned revenue as liabilities. Sum liabilities to 1405.

Explore how accounts receivable, accounts payable, and inventory subsidiary ledgers feed the general ledger with perpetual posting, T accounts, and posting references, plus special journals for recording transactions.

Record and post complex transactions, including equipment purchases and notes payable, to cash disbursements and general ledgers. Demonstrate sales journal entries and cost of goods sold with inventory postings.

Understand sales returns and allowances, net sales, and gross margin; learn how to record returns with a contra revenue account and compute markup on cost.

Explore uncollectible accounts and bad debt expense, estimating allowances for doubtful accounts using income statement and balance sheet approaches, including aging of accounts receivable and write-off practices.

Describe credit card sales, how banks process them, the fees merchants pay, and the cash versus revenue impact with journal entry examples.

Analyze accounts receivable and the allowance for bad debt to determine cash collections from credit customers, using beginning balances, write-offs, and aging data.

Analyze accounts receivable and the allowance for bad debt using an aging method under a balance sheet approach, incorporating beginning balances, write-offs, and credit sales.

Use aging of accounts receivable under the balance sheet approach to determine bad debt expense and record the journal entry: debit bad debt expense, credit allowance for bad debt.

Using an aging method under the balance sheet approach, compute the ending allowance for doubtful accounts of 51,360 to derive net accounts receivable of 440,640.

Analyze accounts receivable and the allowance for doubtful accounts to calculate bad debt expense using beginning balances, credit sales, cash collections, and the year-end balances.

Explore perpetual inventory accounting, and see how purchases, sales, and cost of goods sold are tracked on-hand by computerized systems with a subsidiary ledger for real-time decisions.

Explore perpetual inventory accounting for purchase discounts and returns, adjusting inventory cost, accounts payable, and cost of goods sold to reflect true unit cost and timing of payments.

Explore inventory cost flows and how specific identification, fifo, lifo, and weighted average affect cost of goods sold, ending inventory, and gross margin under gaap.

Record a purchase on account with a debit to inventory and a credit to accounts payable for $1,000, and explain the 4% discount for paying within ten days under net 30.

Use fifo to allocate 800 units between cost of goods sold and ending inventory. Then calculate gross margin as 5,000 in sales minus 4,000 cost of goods sold equals 1,000.

Use LIFO to allocate costs between cost of goods sold and ending inventory, yielding 3600 for cost of goods sold and 2500 for ending inventory from 800 units.

Compute ending inventory and cost of goods sold under the average cost method: total cost 6100 for 800 units, cost per unit 7.625, with 500 sold and 300 ending inventory.

Explore how inflation and deflation affect inventory costing using LIFO and FIFO. Compare cost of goods sold, net income, taxes, and ending inventory under rising and falling prices.

Explore payroll taxes, including employee withholdings (FICA, federal and state taxes) and employer payroll taxes (Social Security, Medicare, unemployment insurance), with wage and sales tax remittance entries.

Record a payroll journal entry for 400,000 gross pay, withhold 24,800 Social Security, 5,800 Medicare, and 40,000 federal and state taxes, yielding 329,400 net pay; employer match occurs separately.

GAAP requires capitalizing all direct or incidental costs to acquire a long-term asset or prepare it for its original use, including tax, shipping, and prep.

Apply gaap rules to decide whether costs are expensed as normal repairs or capitalized as improvements to property, plant, and equipment, and adjust depreciation for extended life.

Record the sale or disposal of a long-term asset by removing its book value, determine gain or loss from the sale price minus book value, and adjust via journal entries.

Learn how goodwill arises when a price exceeds the fair value of net assets, how it is recorded, amortized, and tested under GAAP.

Explain capitalization of a 100,000 machine, calculate depreciation using historical cost minus salvage value over 10 years, and record year-one adjusting entry of 3,750 and year-two depreciation of 9,000.

Record the machine at 100,000, depreciate 9,000 annually (adjusted to 3,750 in year one), yielding a year three book value of 78,250 and clarifying book vs fair value.

Explain amortizing a 100,000 patent over ten years, with 7,500 in year one and 10,000 annually thereafter; year three records a 10,000 December 31 adjusting entry.

Record a business combination using a journal entry: pay 90,000 cash and assume 70,000 liabilities to acquire assets valued at 50,000, recognizing 110,000 in goodwill.

Calculate year two depletion by updating the mine’s book value for improvements, recomputing depletion rate with salvage value and remaining ounces, and applying it to 2,000 ounces to yield 10,600.