The Accounting Cycle

This book is the first of seven books which introduces the basic principles of accounting. It introduces accounting, the fundamental accounting equation, and four core financial statements. Students will learn the basics of accounting, such as debits and credits, the journal, and trial balance, income measurement, revenue and expense recognition, and the reporting cycle. With a foundation in these basics of accounting readers are introduced to financial statement preparation, the accounting cycle, closing entries, classified balance sheets, the importance of business liquidity, and the concept of the operating cycle.

1. Accounting Defined
2. Financial Accounting
3. Managerial Accounting
4. A Quality Information System
5. Inherent Limitations

1. Accounting and Professional Ethics

1. Assets
2. Liabilities
3. Owners’ Equity
4. Balance Sheet

1. Edelweiss Collects an Account Receivable
2. Edelweiss Buys Equipment With Loan Proceeds
3. Edelweiss Provides Services to a Costumer on Account
4. Edelweiss Pays Expenses With Cash
5. Generalizing About the Impact of Transactions
6. Distinguishing Between Revenue and Income

1. Financial Statements
2. Income Statements
3. The Statement of Retained Earnings
4. Balance Sheet
5. Statement of Cash Flows
6. Articulation
7. Unlocking the Mystery of Articulation

1. Accounts
2. Debits and Credits
3. The Fallacy of “+/-” Nomenclature
4. The Debit/Credit Rules
5. Assets/Expenses/Dividends
6. Liabilities/Revenues/Equity
7. Analysis of Transactions and Events
8. Determining an Account’s Balance
9. A Common Misunderstanding About Credits

1. Illustrating the Accounting Journal
2. Special Journals
3. Page Numbering
4. But, What are the Account Balances?

1. Posting
2. To Review

1. Debits Equal Credits
2. Financial Statements From the Trial Balance

1. What do they Look Like

1. Comprehensive T-accounting Illustration
2. Chart of Accounts
3. Control and Subsidiary Accounts

1. The Meaning of “Accounting” Income
2. More Income Terminology
3. An Emphesis on Transactions and Events

1. Accounting Implications

1. Payment and Revenue Recognition

1. Payment and Expense Recognition

1. Illustration of Prepaid Insurance
2. Illustration of Prepaid Rent
3. I’m a Bit Confused – Exactly When do I Adjust?
4. Illustration of Supplies
5. Depreciation
6. Unearned Revenues
7. Accruals
8. Accrued Salaries
9. Accrued Interest
10. Accrued Rent
11. Accrued Revenue
12. Recap of Adjustments
13. The Adjusted Trial Balance
14. Alternative Procedures for Certain Adjustments

1. Modified Approaches
2. Illustration of Cash-Versus Accrual Basis Accounting

1. An Illustration
2. Considering the Actual Process for Adjustments
3. Financial Statements
4. Computerization
5. A Worksheet Approach
6. An Additional Illustration

1. The Closing Process
2. Post Closing Trial Balance
3. Revisiting Computerization

1. Assets
2. Liabilities
3. Equity
4. Other Entity Forms
5. Notes to the Financial Statements

1. Working Capital
2. Current Ratio
3. Quick Ratio