Accounting 221 Exam 1 ReviewAssets = Liabilities + Equity Revenue ExpensesDebit Credit Debit Credit Debit Credit Debit Credit Debit Credit+ - - + - + - + + -Cash Accounts Payable Common Stock Service Revenue Salaries ExpensesAccounts Receivable Salaries Payable Retained Earnings Interest Revenue Insurance ExpensesInterest Receivable Notes Payable Advertising ExpensesPrepaid Insurance Interest Payable Supplies ExpensesPrepaid Rent Unearned Revenue Operating ExpensesSupplies Cost of Goods SoldLand Transportation In/OutInventory Uncollectible AccountsExpenseAllowance for DoubtfulAccounts (contra asset)Beginning RE + Net Income – Dividends = Ending REBeginning Supplies + Additions = Amount Available for use – Ending Balance = Usage During the PeriodAccrual = Event happens before the cash is exchangedDeferral= Event happens after cash is exchanged Income StatementRevenueExpensesNet IncomeStatement of Stockholders EquityBeginning CSPlus: IssuedEnd CSBeginning REPlus : Net IncomeLess: DividendsEnd RETotal S. EBalance SheetAssetsLiabilitiesSEStatement of Changes in Cash FlowCash flow from OACash flow from IACash flow from FABeg CashPlus REEnd cashClosing EntriesClose salary and expense accounts, move funds to RECurrent Ratio = Current Assets/ Current LiabilitiesReturn on Assets = Net income/ Total assetsDebt to asset = Total debt / Total AssetsReturn on Equity = Net Income / Owners EquityBeginning Inventory Balance + Purchases = Cost of Goods Available for SaleCost of Goods Available for Sale – End Inventory = Cost of Goods SoldSales Revenue – COGS = Gross Margin (Profit)Discounts - 2/10 , x/30 = discount %/ how many days discount is available, net amount/ due in x daysDiscount – Debit Accounts Payable, Credit Inventory FOB Shipping Point = Buyers payFOB Destination = Seller incurs costGain/Loss – come from transactions that don’t involve normal businessFIFO = First In, First OutLIFO = Last In, First OutWeighted Average = Total COGAFS – Total QuantityNet Realizable Value = A/R – Allowance for Doubtful Accounts Percentage of Sales Method/ Percentage of Receivables Method Journal Entry( MAKE T ACCOUNTS!!!)Dr. Uncollectible Accounts Expense xCr. Allowance xDirect Write Off MethodDr. Uncollectible Accounts Expense xCr. A/R xLower of cost or market ruleRatios to know Gross Margin % Ratio = Gross Margin / Net SalesNet Income % = Net Income / Net SalesAverage Number of Days in Inventory Average Number of Days in