Chart of Accounts

Accounts and account numbers arranged in sequence in which they are presented in the financial statements.
Illustration 2-18

SO 6 Explain what posting is and how it helps in the recording process.

Chart of Accounts
Numbering system is arbitrary Companies can have as many accounts as is necessary Purpose is systematization Do companies have the same chart of accounts?
Big vs. small company Two companies of the same size

Materiality
A company acquired small and low-value office supplies such as staplers and tape dispensers. While these are expected to have useful lives of more than one year, the company recorded the expenditure as an expense, rather than an asset.

Materiality
When is an item material?
An item is material if knowledge of it would affect or influence the decision of the informed users of the financial statements Information is material if the omission or misstatement could influence the economic decision that users make on the basis of the financial statements

Depreciation additional exercise

Purchased equipment on March 1, 2013. Paid 10M in cash. Equipment has a useful life of 10 years. What is the entry to record depreciation at year-end/ What is the adjusting entry?

Assumptions
Assume calendar year unless otherwise stated. Assume adjusting entries are recorded only at adjusting date not monthly or quarterly, unless otherwise stated.

EXAM
SUNDAY 8:45am-1pm Class presidents - organize THEORY, SHORT PROBLEMS, LONG PROBLEMS Answer sheets will be provided Bring 8 blank scratch papers yellow pad or columnar Mobile devices cannot be used as calculators Remember your class numbers No partial points accuracy and speed Tips:
Attend class and listen well this week