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MU ACC 221 - Accounts in Accounting Cycle

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ACC 221 1st Edition Lecture 5Outline of Previous Lecture- Chapter 3: Basic Transactions in Accounting System Accounting Systemo Shareholderso Accounting Periods Differences in Assetso Inventory v. Equipment Basic TransactionsOutline of Current Lecture - Chapter 4: Accounts in Accounting Cycle Detailing Accountso Revenue and expense accounts begin at zero each periodo New asset accountso New liability accountso New owner’s equity accountsCurrent Lecture- Chapter4:  Detailing Accountso Revenue and expense accounts always begin at zero for each new accounting period Closing accounts – accounts that end at the end of accounting cycle; amounts do not roll over to next cycle, accounts begin at zero. Ending balances for each revenue and expense account always tells total transactions of the month Numbers used to produce the changes report (account summary) At end of the month, the ending balances of each revenue and expense account is translated into the retained earnings account, whose balance rolls over to the next cycle. o New Assets Accounts: Cash Accounts Receivable – used when customers pay on credit Inventory EquipmentThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.o New Liability Accounts Note Payable – money leaned from bank Interest Payable – interest owed to banko New Owner’s Equity Accounts: Common Stock – money that owners put into business Retained Earnings – money resulting from the operations of the business Sales Revenue – add all credit entries in retained earnings that relate to customer sales; put into sales revenue rather than retained earnings Cost of Goods Sold – add all debits in retained earnings related to cost of inventory items sold to customers; place here instead of Retained Earnings Rent – all debit entries retained earnings resulting from paying rent; place here instead of retained earnings Wages – all debit entries in retained earnings resulting from paying wages; place here instead of retained earnings Interest – all debit entries in retained earnings resulting from paying interest to bank; place here instead of retained


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