18 episodes

Accounting 101 Podcast by James Edward Stewart, CPA/ABV, CFE

Accounting 101 with Jimmy Stewart James Stewart

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Accounting 101 Podcast by James Edward Stewart, CPA/ABV, CFE

    17 - The Objectives of Financial Reporting & Concepts of Accrual Accounting

    17 - The Objectives of Financial Reporting & Concepts of Accrual Accounting

    I've read a lot of boring stuff so that you don't have to! Today we will summarize some of the useful information in the FASB Concepts Statements and other literature. 

    This information will be useful as you move along to more advanced levels of accounting.

    • 14 min
    16 - Closing the Books at the End of the Period (The Closing Process)

    16 - Closing the Books at the End of the Period (The Closing Process)

    Example: You own a sole proprietorship. For this period, you had revenue of $100,000, wage expense of $40,000, and computer expense of $30,000 (net income of $30,000). You also contributed $10,000 to the business this period.

    Step 1 – Transfer Revenue and Expense items to Income Summary

                                                                 Debit           Credit

    Revenue                                        $100,000

                Income Summary                                  $100,000

    Income Summary                       $40,000

               Wage Expense                                           $40,000

    Income Summary                       $30,000

               Computer Expense                                  $30,000

    Step 2 – Transfer Income Summary to Equity (capital account)

                                                                      Debit           Credit

    Income Summary                            $30,000

               Capital Account – YOUR NAME                 $30,000

    Step 3 – Transfer contribution/distribution accounts to capital account

                                                                Debit          Credit  

    Contributions – YOUR NAME     $10,000

              Capital Account – YOUR NAME           $10,000

         &nbsp

    • 11 min
    15 - Adjusting Journal Entries (The Adjusting Process)

    15 - Adjusting Journal Entries (The Adjusting Process)

     Today we will go over the adjusting process. This is where we make our adjusting journal entries to get from our unadjusted trial balance to our adjusted trial balance, which contains the figures we use on the financial statements and tax returns.

    We will briefly discuss prepaid expenses, unearned revenues, accrued revenues, accrued expenses, and depreciation/amortization. 

    • 9 min
    14 - An Overview of the Accounting Cycle

    14 - An Overview of the Accounting Cycle

    Today we will discuss the accounting cycle. This is the process taken each period to record transactions, prepare the financial statements, and to reset the temporary accounts to zero for the next period.

    Keep in mind that the steps you may see in your accounting textbook or elsewhere may be slightly different - I have simplified some of the steps:

    Step 1 – Record transactions as journal entries in the general ledger;

    Step 2 – Prepare an unadjusted trial balance as of the end of the period;

    Step 3 – Prepare adjusting journal entries and record on general ledger;

    Step 4 – Prepare an adjusted trial balance as of the end of the period;

    Step 5 – Prepare the financial statements;

    Step 6 – Prepare and record closing journal entries to reset temporary accounts;

    Step 7 – Prepare a post-closing trial balance.

    • 6 min
    13 - How to Dominate Indirect Cash Flow Statements (Fake Cash Method)

    13 - How to Dominate Indirect Cash Flow Statements (Fake Cash Method)

    Example # 1

    Our Accounts Receivable balance increased by $20,000 from the end of last period to the end of this period.

    1. Accounts Receivable is an asset, so it must be debited to increase its balance.

    2. Create journal entry:

                                                                 Debit    Credit

    Accounts Receivable                  $20,000

              Fake Cash                                            $20,000

    3. A $20,000 increase in Accounts Receivable = $20,000 cash flow reduction on the statement of cash flows.

    Example # 2

    Our Accounts Payable balance increased by $10,000 from the end of last period to the end of this period.

    1. Accounts Payable is a liability, so it must be credited to increase its balance.

    2. Create journal entry:

                                                                   Debit     Credit

    Fake Cash                                         $10,000

            Accounts Payable                                   $10,000

    3. A $10,000 increase in Accounts Payable = $10,000 cash flow increase on the statement of cash flows.

    Example # 3

    Our Accrued Expense Payable decreased by $25,000 from the end of last period to the end of this period.

    1. Accrued Expense Payable is a liability, so it must be debited to decrease its balance.

    2. Create journal entry:

                                                                  Debit     Credit

    Accrued Expense Payable            $25,000

                Fake Cash                                             $25,000

    3. A $25,000 reduction to Accrued Expense Payable = $25,000 cash flow decrease on the statement of cash flows.    

    • 11 min
    12 - FIFO & LIFO (Cost Layering Methods)

    12 - FIFO & LIFO (Cost Layering Methods)

    Today we will discuss the cost layering methods that are used within the periodic and perpetual inventory systems.

    Assumptions for purchases:

    50 units purchased on January 1 at $10 each (50 x $10 = $500)
    100 units purchased on February 1 at $11 each (100 x $11 = $1,100)
    150 units purchased on March 1 at $12 each (150 x $12 = $1,800)

    Assumptions for sales:

    250 units sold to customer on April 1 for $5,000

    Journal entries to record purchases under Periodic Method (entry is the same whether LIFO or FIFO is being used):

    January 1: Debit Purchases $500; Credit Accounts Payable $500

    February 1: Debit Purchases $1,100; Credit Accounts Payable $1,100

    March 1: Debit Purchases $1,800; Credit Accounts Payable $1,800

    Total Debits to Purchases = $3,400 ($500 + $1,100 + $1,800)

    Journal entries to record purchases under the Perpetual Method (entry is the same whether FIFO or LIFO is being used):

    January 1: Debit Inventory $500; Credit Accounts Payable $500

    February 1: Debit Inventory $1,100; Credit Accounts Payable $1,100

    March 1: Debit Inventory $1,800; Credit Accounts Payable $1,800

    Total Debits to Inventory = $3,400 ($500 + $1,100 + $1,800)

    Journal entry to record sale - Periodic Method (entry is the same whether using FIFO or LIFO):

    April 1: Debit Accounts Receivable $5,000; Credit Revenue $5,000

    Adjusting journal entry to record Cost of Goods Sold and Inventory - Periodic Method (Using FIFO):

    December 31: Debit Inventory $600 (for ending inventory); Debit Cost of Goods Sold for $2,800; Credit Purchases for $3,400; Credit Inventory for $0 (for beginning inventory)

    Adjusting journal entry to record Cost of Goods Sold and Inventory - Periodic Method (Using LIFO):

    December 31: Debit Inventory $500 (for ending inventory); Debit Cost of Goods Sold for $2,900; Credit Purchases for $3,400; Credit Inventory for $0 (for beginning inventory)

    Journal entries to record sale - Perpetual Method (FIFO):

    April 1: Debit Accounts Receivable $5,000; Credit Revenue $5,000

    April 1: Debit Cost of Goods Sold $2,800; Credit Inventory $2,800

    Journal entries to record sale - Perpetual Method (LIFO):

    April 1: Debit Accounts Receivable $5,000; Credit Revenue $5,000

    April 1: Debit Cost of Goods Sold $2,900; Credit Inventory $2,900

    • 26 min

Customer Reviews

4.9 out of 5
132 Ratings

132 Ratings

Joshuf74 ,

Makes it simple

Graduated with a two year associates in Accounting and listened to this podcast. Makes everything simple to understand, great to use before Accounting 101. First few episodes are phenomenal!

Bakhtiyor Kuliev ,

Accounting

Thank you for your podcast. Excellent quality material and professional explanation. I admire you work.

kayxbryanne ,

Amazing!!

Thanks for the help. You explain everything very clearly.

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