Review CBM 2

Accounting

Prepare and maintain payroll records using computerized and

manual systems (ch 13)

• Where does the employer keep the records of employee’s payroll?

Payroll register

Understand how to create and maintain the accounts receivable

subsidiary ledger (ch 11)• Which transactions are recorded in this ledger

account?– Money received from customers who owed

money. • Where do we find the information?– From Cash receipt Journal (A/Receivable will be

credited.(What is owed gets reduced) Cash will be debited)

Understand how to post information from the journal to the

ledger (ch 11)

• What are the steps to post ?– Date– Journal page number– Amount– Calculate new balance– Write ledger account number in journal

Describe the advantages and disadvantages of credit

• Advantages: – Create a credit history.– Get items before you actually have the money

• Disadvantages:– Debt– Pay late: create a bad credit report– Interest makes you pay more for an item

Understand the relationship of the journal to the ledger

• General Journal, Sales Journal, Purchase Journal, Cash receipts Journal, Cash Payments Journal From these journals, we post to the subsidiary ledger accounts which are in the general journal

Understand how to prepare federal, state, and local payroll

reports (ch 12 and 13)

• W 2- record of an employee’s Gross Income and taxes withheld

• W4- Where the employee indicates the number of withholdings (the more withholdings, the less taxes paid.)

• W 3- What the employer reports to the federal govt. what he paid and withheld from employees

Plan investment strategies for today and for the future

• High (real estate, collectibles, any minerals, stocks)

• and Low risk investments (cd’s; savings account, bonds)

Prepare and maintain payroll reports using manual and computerized

systems (Ch 12 and 13)• FICA: Social Security and Medicare tax – both

employer and employee pays.• SS 6.2 % - .062 x gross pay (Has tax base)• Medicare 1.45% - .0145 x gross pay (no tax base)• The employer has to match it• Employer only pays: unemployment taxes – up to

$7000 earnings per employee.

Understand how to post information from the journal to the

ledger ch 11

• Know the steps.• Starting a new page: put a check mark in the

post ref column where the balance is brought forward

Understand how to calculate employer's payroll taxes and benefits paid by the employer (Ch 12 and 13)

• Net pay: gross pay minus deductions• Week has 40 hours. All hours over 40 are paid

1.5 rate– If someone worked 45 hours at $10 hour.– $40 x $10 + 5 hours x $15 = $400 + $75 = $475

Analyze the trial balance to determine the necessary adjustments to prepare financial

statements (ch 8)

• Trial balance: all the balances from the ledger accounts• We use the Worksheet to determine the trial balance.• When we take inventory, what has been used in

supplies and pre paid insurance, we adjust it and it becomes an expense

Demonstrate a basic understanding of various investment options

• High Risk and Low risk

Calculate employer's payroll taxes

• Employers pay FICA taxes (social security, Medicare)

• Employers pay unemployment taxes to the state and to the federal govt.

• Employees pay federal taxes (income tax) and FICA taxes

Understand how to use credit now and in the future

• Future: student loans, mortgage loans, car loans

• Now: credit card or a charge card

Understand how to create and maintain the accounts receivable and accounts payablesubsidiary ledgers (ch 9)

• Accounts receivable has a normal debit balance

• So when cash is received, A/R will get credited

Understand how to calculate deductions including Social Security tax (ch 12 and 13)

Explain the purpose of the closing process and journalize post-closing

entries (ch 8 )• Supplies expense and insurance expense affect the

Income Summary and will affect the capital account

• To close an account, we reduce it to a zero balance• Permanent accounts: real accounts (assets and

liability accounts)• Temporary accounts are called nominal accounts

(revenue, expense and drawing accounts) Start each year with a zero balance

Understand how to prepare payroll reports (ch 12 and 13)

• Go through the PPT hand outs

Calculate employer's payroll taxes(Ch 12 and 13)

• Study notes and PPT handouts

Create and maintain the accounts payable subsidiary ledger; Post information from the journal

(ch 9)

• Study notes and handouts

Understand how to prepare a post-closing trial balance (ch 8)

• After adjusting Supplies and Insurance Expenses and closing all accounts, the post-closing trial balance is prepared

Understand the closing processCh 8

• Go through Notes and PPT handouts

Analyze the trial balance to determine the necessary adjustments to prepare

financialstatements

Understand how to create and maintain the accounts receivable subsidiary ledger and anaccount for credit card sales

Develop a working knowledge of individual income tax procedures

and requirements

Understand the closing process

• Ch 8

Understand how to prepare payroll reports

• Ch 12 and 13

Understand how to calculate net pay

• Ch 12 and 13

Understand how to create and maintain the accounts receivable

subsidiary ledger

Examine and describe the basic types of insurance

• Life Insurance• Health insurance• Liability• Auto