These are the normal balances in the general ledger when entering
data in individual accounts. Students should take note that the returns and allowances are all
going to reduce their respective sales or purchases accounts. These are contra accounts
for their respective revenue or purchase account.
| NORMAL BALANCES | |||
| BUYER | SELLER | ||
| Purchases | dr | Sales | cr |
| Purchase discount | cr | Sales discount | dr |
| Purchase return | cr | sales return | dr |
| Purchase allowance | cr | sales allowance | dr |
Entries Table
For those accounting students that have a hard time in understanding the adjusting entries for completing the accounting cycle period, here is a short summary of how to go about it.
|
|
Adjusting Entries |
Comments |
Reversing Entries |
||
|
ACCRUAL |
Used portion |
|
|||
| Dr. Expense item/receivable |
WITH ENTRIES |
||||
| Cr. Accrued Payable/ income | |||||
|
|
|
||||
|
DEFERRAL |
|||||
|
Prepaid |
ASSET METHOD |
Used portion |
NO ENTRIES |
||
| Dr. Supplies Expense | |||||
| Cr. Supplies | |||||
|
|
|
||||
|
EXPENSE METHOD |
NOT used portion |
WITH ENTRIES |
|||
| Dr. Supplies | |||||
| Cr. Supplies Expense | |||||
|
|
|
||||
|
Unearned |
LIABILITY METHOD |
Used portion |
NO ENTRIES |
||
| Dr. Unearned X Income | |||||
| Cr. X Income | |||||
|
|
|
||||
|
INCOME METHOD |
NOT used portion |
WITH ENTRIES |
|||
| Dr. X Income | |||||
| Cr. Unearned X Income | |||||
There is the value investing approach and the trading approach. I prefer the value investing approach
because you don’t need to monitor the stock movements all the time. You are also safe no matter where the
market goes. It does not matter whether the market goes up or down, you will make money either way.
The value investing approach requires you to determine the “intrinsic value” of the business and then
just compare it with the existing market price. If it is higher than market price then buy it. If it is lower than the market price then don’t buy it. Simple as that. Buy it when it is cheap, avoid it when it gets more expensive than what you
calculated it to be. The hard part is that it requires you to analyze the financial statements of the company in order to gauge future performance. The information is also combined with the current economic trends plus any potential future opportunities or threats for the company’s profitability. I will detail the specific analysis of individual companies in other posts.
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How to remove dark circles in your eyes
Author: Y. Woo
For those who have suffered a darkening of the areas around the eyes, we have all probably tried to eradicate it to no avail. Well that’s because there’s no simplistic explanation to this, thus there’s also no simplistic cure for this. I will point out the variety of factors for this so you can determine the course of action you might want to take. It might be known by many names but we shall refer to it as “dark circles”. The reasons for the symptom described here hopefully will help you how to remove dark circles in your eyes.
Causes for the dark circles in the eyes:
First is Genetics, you might be pre-disposed to have light colored and thin skin beneath the eyes, this will show the blood beneath your veins to create that dark color effect.
Second is by the simple physical act of scratching the eyes due to a variety of reason be it an allergy, asthma and eczema.
Third will be those medications that inadvertently causes the veins under the eyes to dilate; you will notice that this is almost the same explanation as that for genetics. Only this time, the problem is not caused by naturally thin skin but rather by the effects of medication.
Fourth reason will be because of malnutrition, the dark circles appear as certain types of mineral if lacking can cause discoloration as well. Iron is commonly believed to be the cause of the dark circles if the individual is lacking from it.
Fifth, though the connection is indirect, fatigue will cause dark circles too since lack of sleep causes paleness of skin therefore allowing the darker colored vein to show up.
Lastly, the unwanted dark circles of the eyes might be symptoms of kidney or liver problems since the area underneath the eyes are very much related to the two organs. Also, it might be because of dehydration since it also causes the blood to darken as a result of viscosity build-up.
As you can see, there’s no single cure for the dark circle effect that you can see in your eye but fortunately you can try addressing each of the reasons stated above so as to combat it effectively.
The best way to do this is to eliminate the reasons explained duly and try new products that might be of help.
How to spot accounting gimmickry: R&D Expensing
We all know how valuable an intangible asset to a company like patents, trademark, and copyrights so there must be some way to truthfully report them in the balance sheet. It would have been easy to do this if your company bought an intangible asset from another company wherein you can have solid and concrete numbers to start your basis in a balance sheet. Unfortunately as is often the case, the intangible asset is oftentimes developed internally instead of being purchased from another company.
The expenses that arose from the creation of these valuable intangibles like patents for a new drug are hard to ascertain because the expenses related to this have already been expensed and future benefits from this intangible asset are almost impossible to quantify. Because of this the recorded amount in the balance sheet for the value of the intangible asset is decidedly far below than its actual value.
The FASB has decided to expense all R&D even if this will cause an obvious distortion of the financial picture that the balance sheet will show. Their reason is firstly, future benefits from this R&D cost are very uncertain since it might turn out to be a flop after all. Second, there is no solid evidence in terms of hard numbers that there is a relationship between R&D expenses and future income. Lastly, if ever the research proves to create a valuable intangible asset, the amount of gain from this can not be measured in fixed numbers, or in any logical manner.
You might ask after all this background on why it can’t be recorded in predictable figures how to manipulate the earnings and other balance sheet ratios crucial for analysis. It is quite simple; the management would simply have to cut-back on their expenses in R&D and most possibly in advertising too thus creating an artificial rise in their earnings. While this may look good for the bottom line in a short term focus, this will undoubtedly be detrimental to the business in the long term because sooner or later competitors will come up with new and innovative products and steal your company’s market share. This might benefit the management who are simply concerned with their paychecks and bonuses which they don’t deserve but will ruin the poor investor who is unwary of the possible aggressive accounting gimmicks engaged by unscrupulous executives.
Therefore, even if you know that the real value of an intangible asset is not fully reflected in the balance sheet, you can appreciate the value that good management creates by continually pouring resources to create value that customers will seek and make the investor the happy sums he deserves.
