QuickBooks 2017 All-In-One For Dummies. Nelson Stephen L.
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Название: QuickBooks 2017 All-In-One For Dummies

Автор: Nelson Stephen L.

Издательство: Автор

Жанр: Зарубежная образовательная литература

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isbn: 9781119281351

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СКАЧАТЬ credits. As long as debits equal credits, you know that the transaction is in balance. This balance is one of the ways that double-entry bookkeeping prevents errors.

       Recording sales revenue

Suppose that you sell $13,000 worth of hot dogs. To record this transaction in a journal entry, you debit cash for $13,000 and credit sales revenue for $13,000, as shown in Table 2-11. I should tell you, however, that in the case of the hot dog stand selling hot dogs for a dollar or two apiece, you wouldn’t necessarily use a single journal entry to record sales revenue amounts. Though you could use a single journal entry that tallied the entire day’s sales, if you’re selling hot dogs at a dollar a dog, you could also record 13,000 one-dollar transactions. Each of these one-dollar transactions debits cash for a dollar and credits sales revenue for a dollar.

      TABLE 2-11 Journal Entry 7: Recording the Sales Revenue

       Recording cost of goods sold

You must record the expense of the hot dogs and buns that you sell. You must also record the fact that if you use up your inventory of hot dogs and buns, your inventory balance has decreased. Table 2-12 shows how you record this. Cost of goods sold gets debited for $3,000, and inventory gets credited for $3,000.

      TABLE 2-12 Journal Entry 8: Recording the Cost of Goods Sold

      If you’re confused about this cost-of-goods-sold transaction – it represents the first transaction that doesn’t use cash – read Book 1, Chapter 1, where I describe the two accounting principles. In short, these two principles go like this:

      ✓ Expense principle: This principle says that an expense gets counted when the item gets sold. This means that the inventory isn’t counted as cost of goods sold or as an expense when it’s purchased. Rather, the expense of the hot dog and bun that you sell gets counted when the item is actually sold to somebody.

      ✓ Matching principle: This principle says that expenses or cost of a sale get matched with the revenue of the sale. This means that you recognize the cost of goods sold at the same time that you recognize the sale. Typically, in fact, you can combine journal entries 7 and 8.

      

Another way to think about the information recorded in journal entry 8 is this: Rather than “spend” cash to provide customers hot dogs and buns, you spend inventory.

       Recording the payoff of accounts payable

Suppose that one of the things you do at the end of the day is write a check to pay off the accounts payable. The accounts payable are the amounts that you owe vendors – probably the suppliers from which you purchased the hot dogs and buns. To record the payoff of accounts payable, you debit accounts payable for $2,000 and credit cash for $2,000, as shown in Table 2-13.

      TABLE 2-13 Journal Entry 9: Recording the Payoff of Accounts Payable

       Recording the payoff of a loan

Suppose also that you use cash profits from the day to pay off the $1,000 loan that the balance sheet shows (see Table 2-2). To record this transaction, you debit loan payable for $1,000 and credit cash for $1,000, as shown in Table 2-14.

      TABLE 2-14 Journal Entry 10: Recording the Payoff of the Loan

       Calculating account balance

      You may already be able to guess this: If you know an account’s starting balance and have a way to add up the debits and the credits to the account, you can easily calculate the ending account balance.

Take the case of the cash account balance of the hot-dog-stand business. If you look at the balance sheet shown in Table 2-2, you see that the beginning balance for cash is $1,000. You can easily construct a little schedule of how the account balance changes – this is called a T-account – that calculates the ending balance. (In case you are wondering, a T-account is a visual aid to help in accounting. You start by drawing a big capital T, with debits on the left side and credits on the right side). In fact, Table 2-15 does just this. If you look closely at Table 2-15, you see that the cash beginning balance is $1,000. Then, on the following lines of the T-account, you see the effects of Journal Entries 4, 5, 6, 7, 9, and 10. Some of these journal entries credit cash. Some of them debit cash. You can calculate the ending cash balance by combining the debit and credit amounts.

      TABLE 2-15 A T-Account of the Cash Account

      The information shown in Table 2-15 should make sense to you. But just in case you’re still trying to memorize what debits and credits mean, I’m going to give you a bit more detail. To calculate the ending balance shown in Table 2-15, you add up the debits, add up the credits, and combine the two sums. The net amount in the cash account equals the $5,000 debit. If you recall from the preceding paragraphs, a debit balance in an asset account, such as cash, represents a positive amount. A $5,000 debit balance in the cash account, therefore, indicates that you have $5,000 of cash in the account.

Cash is usually the trickiest account to analyze with a T-account because so many journal entries affect cash. In many cases, however, a T-account analysis of an account balance is much more straightforward. If you look at Table 2-16, you see a T-account analysis of the inventory account. This T-account analysis shows that the beginning inventory account balance equals $3,000. But when journal entry 8 credits inventory for $3,000 – this is the journal entry that records the cost of goods sold – the inventory balance is wiped out.

      TABLE 2-16 A T-Account of the Inventory Account

Paying off the accounts payable and loan payable accounts is similarly straightforward. Table 2-17 shows the T-account analysis of the accounts payable account. Table 2-18 shows the T-account analysis of the loan payable account. In both cases, the T-account analysis shows that the liability accounts start with a credit beginning balance. (Remember that a liability account would have a credit balance if the firm really owed money.) Then, when the payments are recorded to pay off the accounts payable and loan payable in Journal Entries 9 and 10, the liability account is debited. The result, in the case of both accounts, is that the liability account balance is reduced to zero.

      TABLE 2-17 A T-Account of Accounts Payable

      TABLE 2-18 A T-Account of the Loan Payable Account

      I’m not going to show T-account analyses of the other accounts that the preceding journal entries use. In every other case, the only debit or credit to the account comes from the journal entry, which means that the journal entry amount is the account balance. Only one journal entry affects the sales revenue account: Journal Entry 7, which credits sales revenue for $13,000. Because the sales revenue account has no beginning balance, that $13,000 credit equals the sales revenue account balance. The expense accounts work the same way.

       Using T-account analysis results

If you construct СКАЧАТЬ