Description
Topic : Statement of Cash Flows
Your paper should be written in a scholarly manner addressing at least one general journal entry, financial statement impact, and the accounting rules perspective (GAAP and IFRS). Your paper should mirror the type of research and financial accounting detail. Use at least 5-10 SCHOLARY SOURCES
Do not use internet sources such as ehow, investopedia, accounting coach, or motley fool. Good internet resource examples are the FASB, AICPA, IFRS, and the LUO research library of academic journals. This is not a business research paper. It is a technical accounting research paper.
I HIGHLY recommend that you submit your draft copy of your research paper into Safe Assign to receive your Safe Assign score. Your score should not have a match percentage greater than 20%. If it exceeds this level, you probably have too many direct quotes, or you have plagiarized. Your paper must not have too many direct quotes. You must master the material you are writing about to the degree that you can write about the topic in your own words with correct in-text citations for the material you are presenting.
Use the proper amount of in-text citations. Unless what you are writing about Is your original idea or common knowledge, you must include an in-text citation. For a technical accounting paper, you may have as many as 5-10 in-texts citations per page. Do not overlook this detail. It is important.
Explanation & Answer
Please view explanation and answer below.
Running head: ACCOUNTING STANDARDS
Accounting Standards
Student’s Name
Institutional Affiliation
Date
ACCOUNTING STANDARDS
2
Introduction
Accounting techniques are essential for the prosperity of every business. Every business
should keep detailed and accurate records showing business performance. Accounting helps in
preparing records such as financial records and journals, and these records help investors,
lenders, and owners of the business to make informed decisions regarding the business. This
paper explores how various accounting principles such as GAAP and IFRS are used in guiding
accounting activities, how financial statements impact business performance, and how sales
journal entry is an example of a financial statement.
Sales Journal Entries
A sales journal is an example of a general journal in accounting. This type of journal is
part of the record-keeping system that records an event or a transaction. Major entries made in
this journal include; asset sales, interest income, depreciation, stock sales, and interest expenses
(Jensen, 2017). To create an effective sales journal, the accountant should debit and credit entries
appropriately and ensure that, in the end, the debit balance equals the credit balance. Debit and
credit entries affect the account in various ways (Jensen, 2017). For example, assets and
expenses are increased by debits and decreased by credits.
On the other hand, revenue, equity, and liabilities are increased by credit and reduced by
debits. There are two types of sales journal entries depending on the payment mode of the
customer; these are; cash sales journal entries and credit sales journal entries (Jensen, 2017).
Also, these types of journals defer depending on sales tax.
3
ACCOUNTING STANDARDS
Cash Sales Journal Entry
To prepare a cash sales journal, an accountant should record entries when a customer
pays in cash by debiting the cash account and crediting the revenue account (Jensen, 2017). This
entry indicates an increase in cash and business revenue.
Date
Account
x/xx/XXXX
Cash
Notes
Debit
Credit
x
Revenue
x
Practically, these transactions will affect the two accounts and have an impact on sales tax,
which is a liability (Wilder, 2016). Therefore sales tax should be credited to show an increase in
sales tax liability. Debit and credit columns should equal each other in this journal. This
transaction is illustrated in the table below:
Account
Notes
Debit
Credit
Date
Cash
x
x/xx/xxx
Sales Tax
x
Payable
Revenue
x
4
ACCOUNTING STANDARDS
Example of Cash Sales Journal without Sales Tax
Let us take an instance where a customer pays the business $1000. You should debit the
cash account with $1000 and also the credit revenue account with $1000.
Account
Date
Cash
1000
x/xx/XXXX
Revenue
1000
Example of Cash Sales Journal with Sales Tax
Let us consider when a customer pays in cash and is subjected to 5% sales tax. If the
customer had paid $100, he/she must pay $5($100x 0.05) in sales tax. This makes the total
amount that the customer gives the business to be $105.
Account
Notes
Debit
Credit
Date
Cash
105
x/xx/XXXX
Sales Tax
5
Payable
Revenue
100
5
ACCOUNTING STANDARDS
Credit Sales Journal Entry
When the business offers credit to customers, they get goods and services without paying
for them immediately. Therefore, an accountant should increase receivable accounts instead of
cash account (Wilder, 2016). Accounts receivable account represents the total number of
customers who owe the business. When these customers make their payment, you can reverse
entries, decrease accounts receivable accounts,s and increase the cash account (Wilder, 2016).
Also, you need to increase the revenue account to indicate that the business is bringing in the
amount the customers owe the business.
Date
Account
Notes
Debit
Accounts Receivable
Credit
x
Revenue
x
Like in cash sales journal entries, we are likely to deal with sales tax. In this case, the
accounts receivable tot...
