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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