Duty, Honor, Country

Duty, Honor, Country

Wednesday, November 28, 2007

Chapter 12

Subsidiary ledger:



A subsidiary ledger is a ledger that is summarized in a single general ledger account.

There are two types of subsidiary ledgers that we will be using:


  1. Accounts payable ledger
  2. Accounts receivable ledger


Controlling account:

A controlling account is an account in a general ledger that summarizes all accounts in a subsidiary ledger. It's balance equals the total of all account balances in its related subsidiary ledger.

The two types are also accounts recievable and accounts payable.

Controlling accounts are maintained in the subsidiary ledger. Their relationship to a subsidiary ledger is that subsidiary ledgers should equal controlling accounts.

There are two types of schedules that we will prepare:

  1. Schedule for accounts payable
  2. Schedule for accounts recievable

What are the rules for posting a journal's column total?

  1. Place a check mark in parentheses below the General Debit and Credit column totals to indicate that they are not posted
  2. The general ledger account number of the account listed in the column heading is written in parentheses below the special amount column to show that the totals are posted

Why is the 3-column account form used in an accounts receivable ledger a Debit balance?

The balance cannot change from a debit to a credit because once the balance is paid off, no more money is owed.

What is the title of the balance amount column of the accounts payable ledger form and why is it used?

It is a credit balance. Once all the money is paid off no more is owed, therefore it cannot be a debit balance.

Steps for starting a new page in an accounts payable ledger:

  1. Write the vendor name on the vendor line
  2. Write the vendor number on the vendor no. line
  3. Write the date in the date column
  4. Write the word Balance in the item column
  5. Place a check mark in the Post Ref column
  6. Write the account balance in the Credit Balance column

Steps for posting to accounts receivable ledger:

  1. Write the date in the date column
  2. Write the journal page number in the Post Ref column
  3. Write debit amount in the debit column
  4. Add the amount in the debit column to the previous balance in the debit column. Write the new account balance in the debit balance column
  5. Write the customer number in the Post Ref column

Friday, November 16, 2007

Situation 4

When Ann used her computer to prepare a personal resume, even though she provided her own paper she was doing it on her company's pay. This is a waste of the company's money. It may seem that her boss looking on her computer was unethical, but in reality, Ann's boss owns her computer. They have the right to look wherever they want because they legally own it. Not only can they look on her computer, they can actually charge Ann for the time they lost by her doing personal things on their computer. What Ann did was unethical because she used time she should have been working for personal gain.

Chapter 11!!!!!!!!!!!!!!!!!!!!!!!!!!

Vocab

  1. Customer- a person or business to whom merchandise or services are sold.
  2. Sales tax- a tax on a sale of merchandise or services
  3. Cash sale- a sale in which cash is received for the total amount of the sale at the time of the transaction
  4. Credit Card Sale- a sale in which a credit card is used for the total amount of the sale at the time of the transaction
Concepts found in ch. 11

  1. Realization of Revenue
  2. Objective Evidence

Other information

Every business collecting a sales tax needs accurate records of the amount of:
  1. total sales
  2. total sales tax collected

Sales of merchandise may be for cash or on account.

Journal for partnership has 11 columns with new ones added for accounts receivable, accounts payable, sales tax payable, and purchases debits.

To calculate sales tax:

Multiply the total cost by the sales tax percent; in North Carolina sales tax is 7%. Add that number to the total cost.

Sales tax is a liability until paid to the state government. Tax is recorded in a separate liability account with a normal credit balance.


Thursday, November 15, 2007

Proprietorships and Partnerships

Proprietorship:
  • A company owned by one person.
  • Sole owner is responsible for 100% of all liabilities. If liabilities can not be paid off, those collecting on them can take the owners belongings
  • Owner owns 100% of all profits made, and can take out as much of the company's money as possible
  • It is easy to make decisions because owner has final say.

Partnership:

  • Has two or more owners who share equally in responsibility of the company.
  • Owners share in liability
  • Owners have to split profits made amongst each other
  • Harder to make decisions because of various opinions