ACCOUNTING REVIEW

From Group 5
EKA 119 A1*
Ni Luh Putu Sueni

(1506305103)

Ni Putu Desi Pirdayanti

(1506305125)

Ida Ayu Artha Widya Sari

(1506305143)

Udayana University
2016

1. Liabilities are debts owed to outsider (creditor). Liabilities are often identified on the
balance sheet by titles that include word payable.
Example :

Accounts payable

Accrued liabilities

Deferred revenue

Interest payable

Notes payable

Taxes payable

Wages payable

Illustration :

2. Debit certain rules that entered amounts on the leftside of an account debit is an
accounting entry that either increases an asset or expense account, or decreases a liability
or equity account. It is positioned to the left in an accounting entry.
Example
Arnold Corporation sells a product to a customer for $1,000 in cash. This results in revenue of
$1,000 and cash of $1,000. Arnold must record an increase of the cash (asset) account with a
debit, and an increase of the revenue account with a credit. The entry is:

Cash
Revenue

Debit
1,000

Credit
1,000

Illustration

increases in assets are recorded on the debit (left side) of an account

increases in expenses are recorded on the debit (left side) of an account

increases in owners drawing are recorded on the debit (left side) of an account
decreases in owners equity are recorded on the debit (left side) of an account
decreases in revenues are recorded on the debit (left side) of an account
decreases in liabilities are recorded on the debit (left side) of an account

3. Credit certain rules that entered amounts on the rightside of an account. A credit is an
accounting entry that either increases a liability or equity account, or decreases an asset
or expense account. It is positioned to the right in an accounting entry.
Example
Arnold Corporation also buys a machine for $15,000 on credit. This results in an addition to the
Machinery fixed assets account with a debit, and an increase in the accounts payable (liability)
account with a credit. The entry is:

Machinery - Fixed Assets

Accounts Payable
Ilustration :

Debit
15,000

Credit
15,000

increases in liabilities are recorded on the credit (right side) of an account

increases in owners equity are recorded on the credit (right side) of an account
increases in revenues are recorded on the credit (right side) of an account
decrease in owners drawing are recorded on the credit (right side) of an account
decreases in assets are recorded on the credit (right side) of an account
decreases in expenses are recorded on the credit (right side) of an account

4. Reversing Entry A reversing is a journal entry made in an accounting period, which

reverses selected entries made in the immediately preceding accounting period. The
reversing entry typically occurs at the beginning of a reporting period. A reversing entry
is commonly used in situations when either revenue or expenses were accrued in the
preceding period, and you do not want the accruals to remain in the accounting system
for another period
Example :
Accrued revenue
Accrued payable
Illustration
Backo.Co
Reversing Entry

1 January 2014
Wages expense
Wages payable

Debit
5000

Credit
5000

5. Operating expenses is the costs a company incurs that are not related to the production
of a product
Example :

Payroll
Rent
Office supplies
Utilities
Marketing
Insurance

Illustration

6. Cost of merchandise sold is the accumulated total of all cost used to create a product or
service, which has been sold .
Example : the A company sold the merchandise to the B company for 20.000, with cost of
merchandise sold 50.000
Illustration :
Journal
cash
sales

Cost of merchandise sold

Merchandise inventory

Debit
20,000

Credit
20,000

Debit
5,000

Credit
5,000

7. Purchase journal is a subsidiary-level journal in which is stored information about

purchasing transactions. This journal is most commonly found in a manual accounting
system, where it is necessary to keep high-volume purchasing transactions from
overwhelming the general ledger.

Example :
Purchase inventory from a company an account
Purchase office supplies on account from B company
Purchase equipment on account for C compay
Illustration :
Dat
e

account
debited

post
ref

A company
B Company
C Company

Purchase Journal
Accounts
Other
post
Payable
account
ref
cr
dr
10000
Office supplies
Equipment

Amou
nt

3000
6000

8. Subsidiary ledger is a record of the debit to support a general ledger account

Example :
Accounts payable ledger
Accounts receivable ledger
Illustration

Account receivable subsidiary ledger

A. Aron .co
Dat Re
e
f
Debit Credit Balance
200
4
Jan10
6000
6000
3000
3000

Dat
e
200
4
Jan10

Account payable subsidiary ledger

B. Aron .co
Re
f
Debit Credit Balance

8000
2000

8000
6000