Financial Accounting Concepts Essay Example | Topics and Well Written Essays - 500 words - 4

Financial Accounting Concepts - Essay Example Advise to Dr. Leo Krusack on basic accounting procedures for the month of July showing how each transaction is handled on the accrual basis of accounting: - On July 1st, he paid out $1,200 in office rent for the month of July. This is considered as expense for the month of July. .He purchased a new dental chair for $1,300 cash on July 6th. This is capital investment and hence a Balance sheet item. This is not to be considered in the revenue account for July. On July 10th, he purchased $2,000 worth of dental supplies on account. Under the accrual system of accounting only the actual supplies used during the month is considered and not the total purchases. He used $1,300 worth of dental supplies in July. This is an expense for July. On July 10th, he paid an electric bill for $250 This pertains for the month of June and even though paid in July cannot be considered in the revenue account for July under the accrual system of accounting. On July 12th, he paid $75 to place an ad in the loc al newspaper. This is an expense for July. He paid out $1,500 in wages to his hygienist on July 15th and 31st. This is an expense for July. On July 18th, he withdrew $250 for personal expenses. Personal drawings are accounted for in the Balance Sheet when the profits are added to the Capital account.