Midterm Cheat Sheet

T-Table
 Ledger accounts of transactions in terms of credit/debit
 Records starting balance, ending balance, cash paid/received, and expenses.
 Base it on the specific account you are looking at, rather then where the money is going/comes from.
o Examples:
Accounts Receivable Opening Sales Closing Balance Cash Received
Balance Debit Debit Credit
Debit
Deferred Revenue Opening Cash Received Closing Balance Sales
Balance Credit Credit Debit
Credit
Accounts Payable Opening Purchases Closing Balance Cash Paid
Balance Credit Credit Debit
Credit
Inventory Opening Inventory Closing Inventory COGs
Inventory Purchased Debit Credit
Debit Debit
Payable Expense Opening Payable Expense Closing Balance Cash Paid
(Wages, interest, etc.) Balance Credit Credit Debit
Credit
Prepaid Expense Opening Cash Paid Closing Balance Prepaid Expense
(Advertising, Rent, etc.) Balance Debit Debit Credit
Debit
Equipment at Cost Opening Equipment Closing Balance Equipment Sold
Balance Purchased Debit Credit
Debit Debit
Accumulated Depreciation Opening Depreciation Closing Balance Depreciation on
Balance Expense Credit Equipment Sold
Credit Credit Debit
Equipment Sales Opening Loss on Sale Accumulated Cash Received
Balance Debit Depreciation Credit
Debit Credit
Taxes Opening Tax Expense Closing Balance Cash Paid
Balance Credit Credit Debit
Credit
o Stop at Taxes need Net Income before calculating
FSET
 Records of the changes in assets & liabilities
 Use to calculate Net Income
 Balance Table Transactions:
o Revenues & A/R
o COGs, Inventory, A/P
o Wages
o Prepaid Expenses
 Prepaid advertising, prepaid rent
o Payable Expenses
 Utilities payable, taxes payable, interest payable
o Equipment Purchases
o Depreciation
o Loss of Sales of Equipment
o Contributed Capital/Equity
o Dividends
o Interest
o Taxes

Income Statement
 Move to Income Statement after FSET, but before taxes are deducted
 Fill out the income statement using the FSET contributed capital section
 Gross Profit = Sales + COGS
o Sales or Total Revenue
o COGs
 Operating Expenses:
o Wages
o Advertising/Rent/Utilities Expenses
o Depreciation
 Operating Profits:
o Gross Profit – Operating Expenses
 Interest
 Loss/Gain on sale of equipment
 Profit Before Tax = Operating Profits + Interest + Loss/Gain on sale of equipment
o Tax = 35%*Profit Before Tax
 Net Income = Profit Before Tax – Net Income
Balance Sheet
 A record of assets and liabilities/equity at a recorded point in time.
 Assets = Liabilities plus Equity
 When going through, use the closing balance from the T-Table, information from FSET (cash) and
adding/removing balances from previous year (not necessary if information is from T-Table)
o Assets
 Cash = Sum of Cash Assets in FSET
 Accounts receivable, inventory, prepaid assets (T-table)
 Total Current Assets = Non-cash Assets (above) + Cash Assets
 Equipment and Accumulated Depreciation (T-table)
 Net Value of Equipment = Equipment – Depreciation
 Total Assets = Total Current Assets + Net Value of Equipment
o Liabilities & Equity
 Accounts payable, deferred revenue, expenses payable (T-table)
 Total Current Liabilities = Sum of above
 Debt – Either given or from previous balance statement
 Total Liabilities = Current Liabilities + Debt
 Common stock/contributed capital
 Retained Earnings = Net Income – Dividends Paid + P. Retained Earnings
 Shareholder’s Equity = Con. Capital + Retained Earnings
 Total Liabilities and Shareholder’s Equity

Cash Flow
 Inflow – Gain more cash
 Outflow – Lose cash
 Operation Cash Flow
o Indirect
 Net Income
 + Non-cash expenses
o Depreciation
o Loss on sale of equipment
 – Non-cash profits
o Gain on sale of equipment
 Assets (Add decrease/Less Increase)
 Accounts Receivable
 Inventory
 Prepaid Rent/Utilities/Advertising
 Liabilities (Add increase/less decrease)
 Accounts Payable
 Deferred Revenue
 Wages Payable
 Interest Payable
 Tax Payable
 Investing Cash Flow
o Purchase of long-term investments
o Sales of investments
 Financing Cash Flow
o Changes in long-term/short-term debt
o Equity Increase/Decrease
o Dividends
 Cash Flow = Closing Cash – Opening Cash
Definitions
 Cash Accounting – System for recording transactions based on cash flow
 Accrual Accounting – System for recording transactions based on economic effects for the firm
o Accounts Receivable – Gave service, get cash later
o Accrued Revenue – Services provided, get paid later
 Ex.) Invoices
 Period 1
 Rev. up, credit (earned capital)
 A/R up, debit (non-cash asset)
 Period 2
 Cash up, debit (cash asset)
 A/R down, credit (non-cash asset)
o Deferred Revenue – Received cash, give service later
 Ex.) Gift cards
 Period 1
 Cash up, debit (cash asset)
 Deferred Revenue up, credit (liability)
 Period 2
 Deferred Revenue down, debit (liability)
 Rev. up, credit (earned capital)
o Prepaid Expense – Paid cash, get resource later
 Ex.) Rent, Insurance
 Period 1
 Cash down, credit (cash asset)
 Prepaid expense up, debit (non-cash asset)
 Period 2
 Prepaid expense down, credit (non-cash asset)
 Expenses up, debit (earned capital)
o Accounts Payable – Received resources, give cash later
o Accrued Expenses – Expenses incurred, but not paid
 Ex.) Wages, inventory
 Period 1
 Expenses up, debit (earned capital)
 Accounts payable up, credit (liabilities)
 Period 2
 Accounts payable down, debit (liability)
 Cash down, credit (cash asset)