Acct. 221 1st Edition Lecture 6 Outline of Last Lecture I. Steps in the Accounting Cycle II. Deferrals III. Examples of DeferralsOutline of Current Lecture I. Lab Help and Test ReviewII. Accrual and Deferral Review III. Introduction to Chapter 3 a. Debits and Creditsb. Examples Current LectureMonday Lab Extra Help:Wed. 8-9 RM ISOM 112Friday in Flavin 9-10:30Test Review: Tuesday the 17th from 7-8:30pm RM TBAWednesday the 18th 7-8pm RM ISOM 133Review of Accruals and Deferrals1. Acquired Cash from issue of common stock = regular2. Paid dividend to stockholders = regular3. Paid cash on accounts payable = regular4. Incurred other operating expenses on account = Accrual 5. Paid cash for rent expenses = regular6. Performed services for cash = regular7. Performed serviced for client on account = accrualThese 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.8. Collected cash from accounts receivable = regular 9. Received cash for services to be performed in the future = Deferral 10. Purchased land with cash = regular  New Things in Chapter 3 Debits/Credits Journal Entries Trial Balances Closing Entries Interest Debit/Credit Terminology T-account Looks like a t drawn on a piece of paper Account title is written across the top On the left under the T represents debits On the right under the T represents credits Debit An account is “debited” when an amount is written on the left side  Credit An account is “credited” when an amount is written on the right side Each account can be increased or decreased Ex. When cash is received, the cash account is debited, making cash balance increase Ex. When cash is paid out, the cash account is credited, making the ash balance decrease  JUST AS ASSETS = LIABILITIES + OWNERS EQUITY, DEBITS MUST ALWAYS = CREDITS  ASSETS Debit = + Credit = - Debit = Regular Balance  LIBABILITIES Debit = - Credit = + Credit = Regular Balance EQUITY Debit = - Credit = + Credit = Regular Balance  Accounts under equity:- Debit Balances: Make Equity decrease Expenses Dividends- Credit Balances: Make Equity increase Common Stock  Retained Earnings  Revenue  Ex. Purchased supplies for $500 cash Show the t- accounts and debit/credit and the Cash Flow- Supplies = Debit of $500 We gained $500 worth of supplies so supplies increase= debit supplies- Cash = Credit of $500  We paid $500 for supplies so cash decreases = credit cash- Cash Flow? Operating Activity Cash Payments for expenses $500 Total Cash Flow = -$500 Ex. Performed Services on Account Show the t-accounts and debit/credit and the Cash Flow- Accounts Receivable = Debit of $7000 We earned $7000 for performing services on account so accounts receivable increases = debit accounts receivable - Revenue = Credit of $7000 We performed services for $7000 so revenue increases = credit revenue- Cash Flow? Did we receive cash for our services?  NO = No Cash Flow  Ex. Paid $500 on account Show the t-accounts and debit/credit and the Cash Flow- Cash = credit of $500 Cash decreased = credit cash- Account Payable = debit of $500 The amount owed in the accounts payable account decreased because we paid $500 of it- Cash Flow? Operating Activity Cash Payments for Expenses = $500 Net Cash Flow = -$500 Ex. Received $800 on account Show the t-accounts and debit/credit and the Cash Flow- Cash = debit of $800 Received cash = debit cash- Account Receivable = credit of $800 The amount of cash owed to us (accounts receivable) has now decreased as we received $800 of that cash owed to us therefore, accounts receivable decreases = credit accounts