Cash Accounting.pptx

Cash Accounting.pptx

• 1.
  Cash Accounting Presented by:Robbia Gulnar
• 2.
  Learning Goals  Describethe 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 andaccrual bases of accounting. 2 Learning Goal
• 5.
  Under the cashbasis of accounting, a business records only transactions involving increases or decreases in cash.
• 6.
  Under the accrualbasis of accounting, revenue is recorded as it is earned and an expense is recorded when incurred.
• 7.
  Use the cashbasis 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 StockRetained Earnings Stockholders’ Investments Revenues Expenses Dividends
• 10.
  Describe the advantagesand disadvantages of the cash basis of accounting. Learning Goal
• 11.
  The primary advantageof the cash basis of accounting is its simplicity.
• 12.
  The primary disadvantageof the cash basis is that revenues and expenses may not be properly matched on the income statement.