About This Article OpenStax is part of Rice University, which is a 501(c)(3) nonprofit. Which of these asset accounts would appear first on a company's balance sheet? Notes payable are commonly issued when your company borrows from the bank or any other financing source. Enrolling in a course lets you earn progress by passing quizzes and exams. Accounts Receivable Journal Entry Purpose & Examples | What Does Accounts Receivable Mean? citation tool such as, Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, Book title: Principles of Accounting, Volume 1: Financial Accounting. To learn more, launch our free accounting courses. Cash is increasing because the company is gaining cash from the bank, and bank loan payable is increasing because the company is increasing its liability to pay back the bank at a later date. A short-term note can be created from a loan. In this case, the asset reduced was cash, the assets acquired were computers, and the accounts impacted were cash and inventory. The balance in the subsidiary ledger will equal the balance of its supported It recorded the transaction by increasing assets and increasing liabilities. He will be paying US$5,000 total. This information may be accessed by the external auditors as part of their year-end investigation of a company's financial statements and related systems. Suppose your company retains an attorney to prepare and file the corporate charter and articles of incorporation for your company. To record a loan originated for expanding the warehouse. Cash: Installment Notes Payable . follow the accounting cycle This journal entry is necessary as the interest occurs through the passage of time. The second column contains the debit amount to be entered. Understanding a Balance Sheet Example, A Guide to Understanding Gross vs Net Income, Accounting & Bookkeeping Masterclass - Beginner to Advanced, Award winning ACCA SBL Strategic Business Leader course, Accounting Standards A Complete Study for CA/CMA/CS, Finance & Accounting for Management Consultants and Analysts, Accounting in 60 Minutes - A Brief Introduction, Financial Accounting - #1 Ranked University: Course 1 of 5, Accounting 101 - The Principles Of Accounting, A Complete Financial Book-keeping and Accountancy Course. He pays US$15,000.00 for 15,000 shares at US$1 per share of common stock. Also, accounting entries are often organized according to an accounting cycle or accounting period. WebPrepare closing journal entries and year-end General Fund financial statements. The journal entry to record the issuance of the note is: Since the note will mature in one-year, it is recorded as a short-term liability on the classified balance sheet. You will also Entry 2: Word about the business, which will be opening soon, spreads throughout the community, and Jareds Construction Corner grabs the attention of some commercial construction crews. Tristar signed a $40,000 noninterest-bearing note to purchase equipment. 1. (4) Investing Activities. When a company borrows from a bank by signing a formal agreement, an asset titled Cash is increased and a (a) ____________ titled (b)______ (c)_________ is increased. WebNotes Payable Journal Entry Overview. In the note, we promise to pay the $10,000 which is the face value of the note with the interest of 10% per annum on January 1, 2022. The logic behind a journal entry is to record every business transaction in at least two places (known as double entry accounting). Accounting for Non-Interest & Interest-Bearing Notes, Calculating & Recording a Non-Monetary Exchange. WebThe journal entry to record the purchase of this land for cash would be: Recording Building When a business buys a building, its cost includes: the purchase price, repair and remodeling costs, unpaid taxes assumed by the purchaser, legal costs, and real estate commissions paid. (Select all that apply), credit to Accounts Payable of $15,000 And both total assets and total liabilities on the balance sheet will increase by the same amount. As it is a credit purchase, it will record the accounts payable as well. They have to record the fixed assets on the balance sheet. Whether youre learning about accounting for work or about to go on your first accounting interview, youll want to get familiar with journal entries and how they work. All rights reserved. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Which accounts are affected by the transaction, For each account, determine if it is increased or decreased, For each account, determine how much it is changed, Make sure that the accounting equation stays in balance, The accounts affected are cash (asset) and bank loan payable (liability). Therefore, they make a compound entry in the journal to make it clear that both interest and principal are being paid. To record the accrual of a utility expense, 1. A short-term note payable is a debt created and due within a companys operating period (less than a year). Depreciation refers to the loss in value of an asset as time goes by. As soon as it receives the supplies in May, Pizza Aroma should record a ____________ of $1,200. X Company reported its damaged equipment at an amount lower than it originally cost Journal entries are also helpful in organizing accounts payable, accounts receivable, and expenses in connection with inventory. The company takes out a bank loan to fund the expansion of their storage space in order to accommodate larger orders from these accounts. Interest Expense increases (debit) for two months of interest accumulation. Inc. issued $1,000,000 of common stock for cash. You are looking for ways to finance your company's growth without putting any more of your personal money into the company. An easy way to understand journal entries is to think of Isaac Newtons third law of motion, which states that for every action, there is an equal and opposite reaction. On this note, we promise to pay back the $1,000 amount with the interest of $50 on Jun 31 which is at the end of the second quarter of our accounting period. The asset is debited for the amount paid plus the amount owed. Accounts _______ is a liability account and represents amounts owed to suppliers. Directlabor:Quantity,3hoursperunitRate,$18perhourDirectmaterial:Quantity,2poundsperunitPrice,$7perpound. The standards for one unit of Danby Company's product are as follows: Directlabor:Directmaterial:Quantity,3hoursperunitQuantity,2poundsperunitRate,$18perhourPrice,$7perpound\begin{array}{lc}\text { Direct labor: } & \text { Direct material: } \\ \text { Quantity, } 3 \text { hours per unit } & \text { Quantity, } 2 \text { pounds per unit } \\ \text { Rate, } \$ 18 \text { per hour } & \text { Price, } \$ 7 \text { per pound }\end{array} The debit to the notes payable is to the long-term portion, because at the end of the first month there is still $12,000 due within the next twelve months. Purchased land costing $50,000 and buildings costing $400,000. To record a dividend payment made in December, 1. When it comes time to journal business transactions, you are, essentially, putting your analysis of each transaction into writing. (2) Transactions are posted to the ledger This involves ensuring that everyone involved in making payments or collecting them has a thorough understanding of which kinds of transactions qualify. The remaining balance of the note payable is classified as a long-term liability. These commonly occur when a payment must occur outside the regular payment period, such as at the close of a year or fiscal period. Would you issue more debt? Which of these would be captured and reported by an accounting system? Of course, it can even be more than one year for a long-term note payable. When a company purchases an asset but only pays for a portion of it and owes the remainder, which of the following is true? The general ledger is then used to create financial statements for the business. Entry 9: Even though Jared is doing very well with general contractors, he wants to encourage more business from homeowners. The journal entry to record this transaction includes a __________. Later, on June 30, when we honor this $10,000 promissory note that we have issued by paying back this amount together with a 10% interest or $500 ($10,000 x 10% x 6/12), we can make the journal entry as below: This journal entry will increase total expenses on the income statement by $500 as a result of promising to pay a 10% interest on the note payable on June 30. A company issued 1,000 shares of stock for $100,000. This leads to a dilemmawhether or not to issue more short-term notes to cover the deficit. However, notes payable can also be issued in conjunction with the acquisition of assets such as property and equipment, inventory or services. Summarize in the ledger (T-accounts) In this lesson, you will learn how to account for notes payable issued for cash, property and services. Create your account, 25 chapters | What did Shoe Fly receive and give in this transaction. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . 1. b. In this case, we can make the journal entry for the interest expense on the note payable when we make the interest payment on the note, by debiting the interest expense account and crediting the cash account directly. Jared estimates that the forklift will last about 15 years, and at the end of 15 years it will be worth nothing. On September 1. Which groups have claims to a business's assets? In this situation, the journal entry can help Jared and his wife analyze their financial situation in the future, as well as provide documentation to the IRS if necessary. Tristar paid $100,000 in cash for the property. Prepare an unadjusted trial balance WebThis journal entry of accrued interest on note payable will increase total expenses on the income statement and total liabilities on the balance sheet by the same amount of $500 as Accounts Payable has a credit balance of $3,500. Mark has a doctorate from Drew University and teaches accounting classes. As a result of the error,: total liabilities are too low The bank will examine your company's creditworthiness, collateral, ability to make loan payments, and other factors before agreeing to lend it money. A company paid $2,000 cash to an employee for this month's salary. (Select all that apply), record and summarize financial effects of transaction For the first journal entry, you would debit your cash account in the amount of the loan: $50,000, since your cash increases once the loan has been received. To that end, we have published many more additional resources you will find helpful: A free, comprehensive best practices guide to advance your financial modeling skills, Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). Since Sierra paid the full amount due, Short-Term Notes Payable decreases (debit) for the principal amount of the debt. Shoe Fly, Inc, purchased software. A = L + SE, A is increased by 300,000, and L is also increased by 300,000, keeping the accounting equation intact. A short-term note is classified as a current liability because it is wholly honored within a companys operating period. Which of the following statements are correct? A journal entry is when you make a record of a transaction that happens in connection with your personal or business accounts. WebJournal entry for purchasing equipment with note payable. This template contains the accounts normally debited and credited, so that you can easily fill it out when creating a new entry. As a result, this could lead companies and investors to make decisions based on false, misleading information, leading to negative ramifications. Here is some of what happens during the first year, as recorded in journal entries. Enter your name and email in the form below and download the free template now! WebWhat Is a Journal Entry? 283 lessons. In this case, we can make the journal entry for issuing the $10,000 interest-bearing note on July 1, 2021, by debiting the merchandise inventory with this $10,000 together with the credit of the same amount to the notes payable account as below: In this journal entry of issuing the $10,000 promissory note, both total assets and total liabilities on the balance sheet increase by the same amount of $10,000 as of July 1, 2021. This data can help save money and increase profit margins, but only if you carefully specify which transactions to enter. then you must include on every physical page the following attribution: If you are redistributing all or part of this book in a digital format, credit to Cash of $5,000, A current ratio that equals 2.0 suggests that a _________. lessons in math, English, science, history, and more. For example, on January 1, we issue a promissory note to borrow $1,000 cash from one of our friends. copyright 2003-2023 Study.com. To record the payment of a bank loan and interest. d. The federal government sends a Social Security check to your grandmother. The hammer cost JCC US$5 and sold for US$10. WebTypical Accounts Payable Journal Entries #1 Purchase of the merchandise inventory on account: #2 Damaged or undesirable inventory returned to the supplier: #3 Entry when Short-Term Notes Payable decreases (a debit) for the principal amount of the loan ($150,000). Is this activity an investing activity or a financing activity? Although recording journal entries can be very monotonous and repetitive, recording accurate entries at the right time is imperative for companies to show their correct financial status to not only people within the firm but also to external users. It is frequently used to record complex transactions, or several transactions at once. WebThe following entry occurs. (1) After the fair value adjustment is made, prepare the assets section of Reggit Companys December 31 classified balance sheet. Note payable is the promissory note that we issue to the other party in exchange for the cash or other assets by promising that we will pay certain amount of money at the certain date stated in the note. This website helped me pass! Entry 4: JCC then sells three pallets of concrete mix to a contractor. While the loan payments themselves will not get an entry in this journal, the acquisition of the funds, their purpose, and the date it happened all go in the journal. Lets assume that Sierra Sports was unable to make the payment due within 30 days. The concept of accounts payable and notes payable are We recommend using a For some businesses, no, but for others it is an essential entry in their accounting journal for accounting, operational analysis, and tax reporting purposes. Acme then bought $100 of supplies on account and paid $700 of the amount that is owed for supplies purchased on account last month. The __________ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occured. The expansion will cost US$75,000, and Jared agrees to pay US$1,500 every month on the loan. On December 3, 2017, Accounts Payable had a balance of $10,000. On May 1, Lord of the Fries will ___________, Noodlecake pays $300 cash to create the company's logo. Promissory Notes: Time to Issue More Debt? On the other hand, it should be classified as a long-term liability if its term is more than 12 months. You can use this to keep track of money spent and money received. What is a Balance Sheet? To record the purchase of store supplies. structure and function of flowering plants ppt. Loan calculators can help businesses determine the amount they are able to borrow from a lender given certain factors, such as loan amount, terms, interest rate, and payback categorization (payback periodically or at the end of the loan, for example). Accounts Payable decreases (debit) for the original amount owed of $4,020 before any discounts are taken. The journal entry will be as follows: Interest Expense $800. If you have ever taken out a payday loan, you may have experienced a situation where your living expenses temporarily exceeded your assets. Another similar scenario is the assumption of a loan payment to take possession of property. As an Amazon Associate we earn from qualifying purchases. While this may seem like the easiest step, it is also one that is commonly overlooked. (Check all that apply), A promise to pay is given The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo The cash is debited at the acquisition of the note and the installment note payable is credited. Sierra does not have enough cash on hand currently to pay for the machine, but the company does not need long-term financing. Without proper journal entries, companies financial statements would be inaccurate and a complete mess. Match the invoice to negative lines in the purchase order to record the (2) Is the unrealized gain (or loss) on the portfolio of available-for-sale securities reported on the income statement? Sierra Sports requires a new apparel printing machine after experiencing an increase in custom uniform orders. Create an online video course, reach students across the globe, and earn money. What is Net Income and Why is it Important? A journal entry is usually recorded in the general ledger; alternatively, it may be recorded in a subsidiary ledger that is then summarized and rolled forward into the general ledger. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? For example, when you generate a sale for cash, this increases both the revenue account and the cash account. Which of the following accounting cycle steps describes the process of recording journal entries? Which of the following does NOT add to U.S. GDP? He decides to purchase 20 of them to take advantage of what seems like a very good deal. The company may include this as an asset on its balance sheet. This makes it easier to identify financial transactions according to the month, year, or fiscal period in which they occurred. Because this is a loan, the business has to pay US$35 in interest as well. _________ financing is obtained from creditors and ___________ financing is obtained from owners. Record a journal entry If a company issues $100,000 common stock, the Common Stock T-account will have $100,000 posted on the ____________ side. Sierra Sports purchased $12,000 of soccer equipment from a supplier on credit. Notes payable can be issued to acquire property. In this way, you have a concrete description of which assets you reduced and which assets you acquired, as well as the accounts impacted by the transaction. 1999-2023, Rice University. Sometimes a vendor will ask a customer to execute a note payable if the customer does not stay current when paying their invoices for goods sold. The $40,000 payment is due on September 1,2025 . To determine the final monetary value of accounts listed on the financial statements on the companys year-end, multiple journal entries are recorded and tracked in an account called a T-account, which is a visual representation of a general ledger account. In this journal entry, the purchase discounts is a temporary account which will be cleared to zero at the end of the period. When Sierra pays in full on December 31, the following entry occurs. What are some positives and negatives to the promissory note practice? The asset account in this journal entry can be the cash account if we issue the promissory note to borrow money or it can be the merchandise goods if we issue the note to purchase the goods. Which of the following are considered business documents? Like all new companies, yours is struggling with cash flow. For example, if a company bought a car, its assets would go up by the value of the car. An adjusting entry is used at month-end to alter the financial statements to bring them into compliance with the relevant accounting framework, such as Generally Accepted Accounting Principles or International Financial Reporting Standards. You can create a journal entry to record the purchased vehicle transaction in QuickBooks Online. People come in on Saturdays and pay US$15 each to take the classes. credit to Notes Payable. (a)_____________ liabilities are obligations that will be paid or met within 12 months of the balance sheet date, whereas (b)__________ liabilities are not due within 12 months of the balance sheet date. It will then become a short-term liability. Current assets This is posted He decides to pay for them using the same combination of cash and credit that he used with the other compressors he bought: US$1,000 with cash and the rest, US$4,000, with credit. He does this instead of paying himself, which reduces his overall tax liability. Entry 8: JCC has to make a payment on the loan he took out for the warehouse improvements. The supplier might require a new agreement that converts the overdue accounts payable into a short-term note payable (see Figure 12.13), with interest added. consent of Rice University. (Select all that apply), (1) Notes Payable are interest-bearing, Accounts Payable are not. Select all that apply), A stockholders' equity account decreases by $100 (Select all that apply), credit to Accounts Payable What is the effect on the accounting equation? (3) Purchasing a List of Excel Shortcuts Note payable (due in 5 months) The other account affected is the companys cash going down because they used the cash to purchase the car. Continuing the above example, the equipment and note should be recorded at their cash Entry 5: Business is going very well, and during the holiday season, theres a spike in sales. Even if a company finds itself in this situation, bills still need to be paid. Financial reporting is the act of presenting a companys financial statements to management, investors, the government, and other users to help them make better financial decisions. The first column includes the account number and account name into which the entry is recorded. The first step in starting a business to obtain cash from owners and/or creditors. A journal entry is used to record a business transaction in the accounting records of a business. In addition to including the information ascertained by your analysis, you also put in a brief description of the nature of the transaction. (Check all that apply), Company has the ability to pay its current liabilities does not provide account balances, When a company pays for amounts purchased on account, the entry includes __________. 3. A short-term notes payable created by a loan transpires when a business incurs debt with a lender Figure 12.14. International Financial Reporting Standards. This typically occurs when the company is in a start-up stage and needs outside professional services to set up the corporation, review contracts, perform accounting services, etc. He is a writer, editor and has experience in public and private accounting. X Company reported its inventory at its current market value, which is lower than its original cost, Liabilities that will be paid or fulfilled within 12 months are ______ liabilities. The interest expense for the first month is calculated as 1/10th of the outstanding principal of $60,000 divided by twelve (6,000 12 = 500: number of months in the year). (3) Account balances are computed. Likewise, the journal entry for interest-bearing notes payable in this case will increase both total assets and total liabilities on the balance sheet. In this case, we can make the journal entry for interest-bearing note payable in order to record our liability as well as to recognize the increase of the asset. For example, if a business purchases three new computers for employees, they may analyze the transaction in this way: Purchased three PCs using cash and then added to our inventory.. Adjust the accounts 1. In the following month, the same calculation will be made, but the principal balance outstanding will be reduced by one thousand dollars to reflect the principal payment. This journal entry is made to eliminate the interest payable that we have recorded above as well as to account for the cash outflow for the interest payment on the note payable. Sometimes, we may issue an interest-bearing note to purchase the goods from our supplies or to borrow money from the creditor. 2. 1. They need to purchase replacement inventory quickly, and the company decides to use a combination of cash and credit. Subsidiary Ledger Overview & Examples | What is a Subsidiary Ledger? With the help of a spreadsheet or accounting software, you can also use journal entries to track trends relating to money spent and money received. This field is indented if it is for the account being credited. The journal entry (followed by the explanation recorded in the general journal) for such a transaction is: The note will be classified as a long-term liability on your company's balance sheet until one year before its maturity date. How to Calculate the Funded Status of a Pension Plan, Interest Expense Formula | How to Calculate Interest Expense, Issuing Premium & Discount Bonds | Process, Advantages & Disadvantages, Journal Entry for Perpetual Inventory System | Types, Steps & Examples, Disclosure Requirements for Cash Flow Statements. For example, the journal entry to record payroll usually contains many lines, since it involves the recordation of numerous tax liabilities and payroll deductions. To use the computer example above, the entry may look like this, assuming each of the three computers cost US$1,000: You could also choose to record a purchase like this using three different journal entries. Select the investing activities from the list below -Check all that apply. The structure of a journal entry contains the following elements: A header line may include a journal entry number and entry date. A promissory note includes terms of repayment, such as the date and interest rate. Below is the journal entry for the first payment Jared makes for his new, seasonal service representative. The increase in the Common Stock account would be recorded with a: Which of the following are possible effects on the accounting equation when recording a transaction that increases a liability by $100? This means the forklift depreciates in value US$1,000 every year. Cash increases (debit) as does Short-Term Notes Payable (credit) for the principal amount of the loan, which is $150,000. (4) Investing activities Journalize the companys purchase of merchandise inventory By accident, Z Best recorded the transaction by increasing cash and decreasing stockholders' equity. To record the purchase of Computer 2022-3 added to inventory. Which of the following are true about Notes Payable and Accounts Payable? 1. are licensed under a, Prepare Journal Entries to Record Short-Term Notes Payable, Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting, Identify Users of Accounting Information and How They Apply Information, Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities, Explain Why Accounting Is Important to Business Stakeholders, Describe the Varied Career Paths Open to Individuals with an Accounting Education, Describe the Income Statement, Statement of Owners Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate, Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses, Prepare an Income Statement, Statement of Owners Equity, and Balance Sheet, Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements, Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions, Define and Describe the Initial Steps in the Accounting Cycle, Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements, Use Journal Entries to Record Transactions and Post to T-Accounts, Explain the Concepts and Guidelines Affecting Adjusting Entries, Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries, Record and Post the Common Types of Adjusting Entries, Use the Ledger Balances to Prepare an Adjusted Trial Balance, Prepare Financial Statements Using the Adjusted Trial Balance, Describe and Prepare Closing Entries for a Business, Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity, Appendix: Complete a Comprehensive Accounting Cycle for a Business, Compare and Contrast Merchandising versus Service Activities and Transactions, Compare and Contrast Perpetual versus Periodic Inventory Systems, Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System, Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System, Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods, Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies, Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System, Define and Describe the Components of an Accounting Information System, Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders, Analyze and Journalize Transactions Using Special Journals, Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems, Analyze Fraud in the Accounting Workplace, Define and Explain Internal Controls and Their Purpose within an Organization, Describe Internal Controls within an Organization, Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries, Discuss Management Responsibilities for Maintaining Internal Controls within an Organization, Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries, Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements, Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions, Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches, Determine the Efficiency of Receivables Management Using Financial Ratios, Discuss the Role of Accounting for Receivables in Earnings Management, Apply Revenue Recognition Principles to Long-Term Projects, Explain How Notes Receivable and Accounts Receivable Differ, Appendix: Comprehensive Example of Bad Debt Estimation, Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions, Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method, Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method, Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet, Examine the Efficiency of Inventory Management Using Financial Ratios, Distinguish between Tangible and Intangible Assets, Analyze and Classify Capitalized Costs versus Expenses, Explain and Apply Depreciation Methods to Allocate Capitalized Costs, Describe Accounting for Intangible Assets and Record Related Transactions, Describe Some Special Issues in Accounting for Long-Term Assets, Identify and Describe Current Liabilities, Analyze, Journalize, and Report Current Liabilities, Define and Apply Accounting Treatment for Contingent Liabilities, Record Transactions Incurred in Preparing Payroll, Explain the Pricing of Long-Term Liabilities, Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method, Prepare Journal Entries to Reflect the Life Cycle of Bonds, Appendix: Special Topics Related to Long-Term Liabilities, Explain the Process of Securing Equity Financing through the Issuance of Stock, Analyze and Record Transactions for the Issuance and Repurchase of Stock, Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits, Compare and Contrast Owners Equity versus Retained Earnings, Discuss the Applicability of Earnings per Share as a Method to Measure Performance, Describe the Advantages and Disadvantages of Organizing as a Partnership, Describe How a Partnership Is Created, Including the Associated Journal Entries, Compute and Allocate Partners Share of Income and Loss, Prepare Journal Entries to Record the Admission and Withdrawal of a Partner, Discuss and Record Entries for the Dissolution of a Partnership, Explain the Purpose of the Statement of Cash Flows, Differentiate between Operating, Investing, and Financing Activities, Prepare the Statement of Cash Flows Using the Indirect Method, Prepare the Completed Statement of Cash Flows Using the Indirect Method, Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency, Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method, Short-Term Promissory Note.

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