Notesale: Turn your study into money

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• Accrual Method : Its an accounting method to record or report the revenues on the income
statements “When its earned even if it will be earned 30 days later “
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( The
accrual method requires a large companies not small companies )

• Adjusting Entries : Process made in the last day of the accounting period ,so that the
financial statements reflect the revenues & expenses incurred during the accounting period
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• Correcting Entries : Correcting entries involve any combination of the Income statements &
The balance sheet
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• General ledger : consist of all items in the balance sheet & the income statements
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The credit = debit
• Contra Account : an account with a balance that is opposite of the normal balance
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• Subsidiary ledger : Contains the supporting detail for a control account in the general
ledger
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• Temporary accounts : = in the income statements
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• Contra Assets account : An assets with a credit balance
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( Account
receivables - allowance for uncollectible account )

• Allowance for doubtful account : Balance sheet account that reduces the reported amount
of the account receivables
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“ bad debt expense “
- The allowance for doubtful accounts represents management’s best estimate of the amount
of accounts receivable that will not be paid by customers
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• Write-off method : ( No allowance account ) ,Dr : Account receivables Cr: Bad debt expense
• Treasury stock : Corporation's previously issued shares of stock which have been
repurchased from the stockholders and the corporation has not retired the repurchased

shares
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)
• Prepaid insurance : A current asset which indicates the cost of the insurance contract
(premiums) that have been paid in advance
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• Retained Earning : Corporation's cumulative earnings since the corporation was formed
minus the dividends it has declared since it began “ kept for reinvestment or development or
business’s own purposes
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One indication is that the cash flows from operating activities shown on the
statement of cash flows consistently exceed the amount of net income shown on the income
statement

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