Intuit AcademyBookeeping Part 2

Hybrid Method Accounting - A combination of the cash-basis and accrual methods of accounting Adventures in Asset Accounting - Tangible Assets - is generally a physical asset, such as inventory, a vehicle, or a building Intangible Assets - I not physical. Ex. A copyright, patent, or brand recognition. o Do not appear on the balance sheet but do add value to the business. All else being equal, a buyer would pay more for the company that holds a patent for its technology than the company that does not Accumulated Depreciation - a long-term asset like a vehicle can lose thousands of dollars in value each year. We keep a running total of how much value it has lost in an account called accumulated depreciation Contra-asset account- increase as a credit and decrease the balance with a debit. In other words, it has a natural credit balance Accounts Payable & Receivable are for a service from a vendor Ex. Month to month Notes Payable & Receivable are a written agreement Ex. Auto Loan Accounts uncollectible - are receivables, loans or other debts that have virtualy no chance of being paid Customer buys on credit, amount added to AR Customer fails to pay, money move to "Aged" account Customer still doesn't pay, money moves to "Doubtful" account Customer is not expected to pay, money moves to account uncollectible Bad Debt - Money not paid - two methods to write off: 1. Direct write-off method a. Simple b. Takes care of uncollectible accounts in a single journey entries c. Easier with business owners with no accounting background i. Cons Do not follow the matching principles Could make a business seem more profitable than it actually is 2. Allowance method: a. Company's analyz invoices and estimate the amount of bad debit expense b. Adheres to the matching princible c. More accurate books i. Cons More complex
Uploaded by PrivateBoulder10206 on