Memory game to understand normal balances of accounts.
This handout uses arrows to describe increases and decreases in current accounts. The blue arrow indicates increase and the yellow arrow indicates decrease.
NFJPIA Theory of Accounts 2013Full description
Property Notes courtesy of Nick 'Big Dog' WoodFull description
Stockholder’s Equity Accounts with Normal Balances
Stockholder’s Equity Accounts can be broken do wn into two groups, which are money invested by the owners of the company and money brought into the business in the course of performing its own business activities. These accounts do not represent physical assets but are a record keeping of how the company received its money to invest in company assets.
Accounts presented on the Balance Sheet only: Account Title Common StockStock- is to represent money invested by the owners which includes voting rights at stockholders’ meetings. Recorded at par or stated value at the time of sale. Preferred Stock-is Stock-is to represent money invested by the owners which does not usually entitle voting rights to stockholders but has other rights to dividends. Recorded at par or stated value at the time of sale Paid-in Capital in excess of (par or stated) valuevalueMoney received from investors that exceed the par or stated value of the stock. Retained EarningsEarnings- represents the past income that was retained in the company as either an asset or cash in the bank. Treasury StockStock- is the company’s own stock that was repurchased for the open markets. This account is considered a contra equity account since it reduces the value of the stockholders’ equity section of the b alance sheet.
MJC Revised 1/2012
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Stockholder’s Equity Accounts with Normal Balances
Accounts presented on the Retained Earnings Statement only: Account Title Retained Earnings, 1/1/00-Beginning 1/1/00-Beginning of the fiscal period for which the statement is being prepared. Normal balance is on the credit side of the account. Net IncomeIncome- This is not an account but is an amount, which is taken from the income statement,’s ending balance. DividendsDividends- are the amount of money paid out during the year to owners. This account has a debit normal balance and is considered to be a contra equity accounts. Retained Earnings, 12/31/00-Ending 12/31/00-Ending of the fiscal period for which the statement is being prepared. Normal balance is on the credit side of the account and final total is then transferred onto the balance sheet.
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N/A
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Accounts presented on the Income Statement only:
Revenues- Section heading only- is any money earned by performing either services or sales. These accounts have a normal balance on the credit side and increase the retained earnings accounts
Account Title
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Sales Revenue
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Service Revenue
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Rent Revenue
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Ticket Revenue
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Interest Revenue
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Subscription Revenue
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MJC Revised 1/2012
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Stockholder’s Equity Accounts with Normal Balances
Accounts presented on the Income Statement only:
Expenses-Section Expenses-Section heading only- these are the cost incurred to produce income for the business. Because expenses reduce Retained Earnings these accounts have a normal balance of a debit.
Expenses are subtracted from revenues in order to come up with net income which is then transferred onto the Retained Earnings Statement. The ending retained earnings is then transferred from the Retained Earnings Statement onto the balance sheet.
