Cash Accounting.pptx
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The document discusses cash accounting and covers several learning goals: (1) describing the basic elements of a financial accounting system and the cash and accrual bases of accounting; (2) using cash basis accounting to analyze transactions in a corporation's first period; and (3) describing advantages and disadvantages of cash basis accounting. Specifically, it provides an example journal entry to record an owner's investment under cash basis accounting and notes that the primary advantage is simplicity while the primary disadvantage is revenues and expenses may not be properly matched.
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- 1. Cash Accounting Presented by: Robbia Gulnar
- 2. Learning Goals Describe the basic elements of a financial accounting system. Describe the cash and accrual bases of accounting Use the cash basis of accounting to analyze, record, and summarize transactions for corporation’s first period of operations. Use the cash basis of accounting to prepare financial statements for the first period of operations. Describe the advantages and disadvantages of the cash basis of accounting
- 3. Balance Sheet Assets = Liabilities Stock- holders’ Equity + The rights of creditors The rights of the stockholders The Accounting Equation
- 4. Describe the cash and accrual bases of accounting. 2 Learning Goal
- 5. Under the cash basis of accounting, a business records only transactions involving increases or decreases in cash.
- 6. Under the accrual basis of accounting, revenue is recorded as it is earned and an expense is recorded when incurred.
- 7. Use the cash basis of accounting to analyze, record, and summarize transactions for a corporation’s first period of operations. 3 Learning Goal
- 8. Dr. Landry deposits $6,000 in a bank account in the name of Family Health Care, P.C. in return for shares of stock in the corporation. Capital Stock 6,000 Investment by Dr. Landry Cash 6,000 a. Assets Stockholders’ Equity =
- 9. STOCKHOLDERS’ EQUITY Capital Stock Retained Earnings Stockholders’ Investments Revenues Expenses Dividends
- 10. Describe the advantages and disadvantages of the cash basis of accounting. Learning Goal
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