During the sale of services or merchandise, you will generate revenues and incur expenses (through selling services and merchandise for cash or credit). The credit creates a receivable for collection at a later date. In this video, see how those are recorded for bookkeeping.
- Now that you have your lawnmower, transportation, supplies…and inventory, it's time for you to get to work.…The next category of common transactions involves the sales…of service or merchandise.…You generate revenues…and incur expenses during this process.…Sometimes you might sell services and merchandise for cash,…at other times you might sell them on credit…and a receivable is established for collection…at a later date.…Therefore revenues indicate the source, not only of cash…but of other assets as well,…all of which are received in exchange for the merchandise…or services provided.…
Similarly, expenses may be incurred and paid immediately…with cash or they may be incurred on credit…and as they may be charged with a cash payment…to be made at a later date,…we will illustrate these possibilities…in the transactions to follow.…And note that the effective revenues and expenses…on owner's equity is indicated…in brackets for each transaction.…So, let's get started.…As soon as your neighbors find out…that you're in the lawn care and landscaping business,…
- Identify how a balance sheet reflects the accounting equation.
- Name the account where debits are increases and credits are decreases.
- Define a journal.
- List the three things, in order, that you must address when making journal entries.
- Explain the function of financial statements that is most important for entrepreneurs.
- Assess the purpose of a trial balance.
Skill Level Beginner
1. Review of the Financial Statements
2. Fours Steps in the Bookkeeping Process
3. How Transactions Affect the Accounting Equation
4. The General Ledger
5. Illustration of the First Three Steps in the Accounting Cycle
The role of computers3m 44s
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