financial accouting

[SuperBowlNachos]

Is anyone good at this? I am no where near good at this stuff, the book is TERRIBLE and the professor is probably the worst I've ever had in 3 years of school.

I am having trouble figuring out what exactly goes under the asset category. Yes, I don't even know the basics.



I am having to get the current ratio, acid test ratio and gross margin ratio for that information. I know how to do those, I just have no idea what the correct current assets or liabilities are. BTW the cost of goods sold is actually 40,700, there is information in another section that adds to it.

If anyone is feeling generous and have a love for accounting and wants to give me a breakdown of the basics, feel free I'm also confused on what exactly debits and credits are.

[ImTellinTim]

Re: financial accouting

Current Assets:
Cash, Merch Inventory, Store Supplies, and Prepaid Insurance

Current Liabilities:
Accounts Payable

[SuperBowlNachos]

Re: financial accouting

Damn. Pretty sure that is what I was doing.

Current ratio = assets / liability

Correct?

[Blaze125]

Re: financial accouting

Specifically it's Current Assets/Current Liabilities, but you're essentially correct.

[Fresh Tendrils]

Re: financial accouting

I am having to get the current ratio, acid test ratio and gross margin ratio for that information. I know how to do those, I just have no idea what the correct current assets or liabilities are. BTW the cost of goods sold is actually 40,700, there is information in another section that adds to it.

If anyone is feeling generous and have a love for accounting and wants to give me a breakdown of the basics, feel free I'm also confused on what exactly debits and credits are.

Current assets are assets that are liquid; that is they can be converted into cash within 12 months (or the length of the operating cycle - whichever is longer, but typically it is 12 months). Current assets also include assets that are to be used within the same period of time (ie: prepaid assets).

On the flip side, current liabilities are liabilities (ie: debt) that is to be paid within 12 months and is to be paid with current assets. Current liabilities also include the current installment due of long-term debt.

Debits and Credits aren't difficult, remembering Assets = Liabilities + OE is helpful. When I was in school I always found it helpful to use T accounts - draw a T, put the name of the account on top, debits go on the left of the | and credits go on the right. Assets typically have a debit balance. So, think cash and debit card. Liabilities and Owner's Equity have a credit balance - think credit card. Typically when you ADD to an asset account, lets say cash, you DEBIT cash. On the other side of the equation (from above), when you ADD to debt, you CREDIT a liability. If you were to pay off/down a liability, you would SUBTRACT from cash (CREDIT) and SUBTRACT from the liability (DEBIT).

Remember that when posting to the accounts that a debit amount must be off-set by a credit amount.

[ImTellinTim]

Re: financial accouting

To add to FT's post.

Revenues have a normal credit balance, and expenses have a normal debit balance.

Accounts are increased by whatever their normal balance is and decreased by the opposite. (Eg.: Cash is increased by a debit and decreased by a credit.)

The balance of any given account is the difference between all debit and credit entries made to it.

[Kevin26385]

Re: financial accouting

This acronym always helps me...Just took my first ACC test and managed to get an 80.

Last two letters in each acronym are what the normal balance is

ADE
Assets, Dividends, Expenses

LCR
Liabilities, Common Stock, Retaining Earnings and Revenue

[SuperBowlNachos]

Re: financial accouting

Luckily the test is open book/note. Although this is the type of guy whose homework takes 2-3 hours a week.

He told us to think of it as debits make you happy and credits make you sad.

As far as assets the thing that confuses me is office supplies is a current asset, but office equipment is long. Is that because supplies like a paper runs out and a fax machine is made for long term is?

[USF11]

Re: financial accouting

Just be glad you don't have to study for lvl 1 of the CFA exam. The accounting portion is a nightmare. .

[SuperBowlNachos]

Re: financial accouting

This is it for me. CIS major. I will party heavily if I get a C and can move on lol

[Fresh Tendrils]

He told us to think of it as debits make you happy and credits make you sad.

As far as assets the thing that confuses me is office supplies is a current asset, but office equipment is long. Is that because supplies like a paper runs out and a fax machine is made for long term is?

LOL. Credits make you happy sometimes; you have revenue accounts that have a credit balance. Stock accounts are the same. Plus, debt isn't always a bad thing.

You're correct on the supplies vs equipment. Just remember that most of the time long-term assets are depreciated over the course of its useful life. Current assets are used up in one year or less.



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[Kevin26385]

Re: financial accouting

Luckily the test is open book/note. Although this is the type of guy whose homework takes 2-3 hours a week.

He told us to think of it as debits make you happy and credits make you sad.

As far as assets the thing that confuses me is office supplies is a current asset, but office equipment is long. Is that because supplies like a paper runs out and a fax machine is made for long term is?

That's it? I spent close to 15 hours on the first 3 chapters doing study problems and homework

[p_rushing]

Re: financial accouting

Luckily the test is open book/note. Although this is the type of guy whose homework takes 2-3 hours a week.

My Tax class professor let you bring 1 sheet of paper with whatever you wanted on it, typed, written, etc. He even allowed it on the final. Even with that, without the curve, no one made a C.

[Fresh Tendrils]

Re: financial accouting

Tax Accounting is ridiculous. I barely passed that class. Its just so much information, it is nearly impossible unless that's the only class and only thing you do all semester.

[fistofrage]

Re: financial accouting

My Tax class professor let you bring 1 sheet of paper with whatever you wanted on it, typed, written, etc. He even allowed it on the final. Even with that, without the curve, no one made a C.

We could bring our books and any notes you wanted to my tax classes, but the tests were so masssive that either you knew the stuff or you didn't. If you were flipping pages during the exam, no way you finished.