So when I was “studying” for my final I made this necklace for one of the people in my study group. Those of you who have taken Basic Accounting may be able to interpret it without the breakdown (also please check my work please to make sure it is right). It actually helped me a lot because it helped me visualize the basics - once you have the basics down the class is so much easier. I posted the full translation so if anyone wanted to make it for a friend without having to take the class yourself you can. Or if you are about to take the class this quarter - make one for yourself.
Here is the simple break-down:
The financials in the order you prepare them: Income Statement (IS) (green bead), Statement of Owner’s Equity (SOE) (blue bead), Balance Sheet (BAL) (gold bead)
The Equation: Assets = Liabilities + Owner’s Equity (Capital, Withdrawals, Revenue, Expenses)
I have a small green bead on the side (debit or credit) that is the normal balance for each account and a small red one for the other side. Then I have a colored bead to show which account is on which financial. At the end of the list of accounts I have CE – closing entries signified by a red bead to show which accounts get closing entries. *
Then FIFO (first in first out) and LIFO (last in first out) and five colored beads so you can slide then in the right order to remind you how to do each method of inventory accounting.
*Full translation: (IS) Income Statement (green bead); (SOE) Statement of Owner’s Equity (blue bead); (BAL) Balance Sheet (gold bead); (A) Assets (small green bead on debit side – the natural balance side for this account) (gold bead – this account is on the balance sheet); (two silver beads) =; (L) Liabilities (small green bead on credit side / natural balance) (gold bead – on balance sheet); (silver bead) +; (OE) Owners Equity which includes { (C) Capital (small green bead on credit side / natural balance) (blue bead – on Statement of Owner’s Equity, gold bead – on Balance Sheet, red bead – gets a closing entry); (W) Withdrawals / Drawings (small green bead on debit side / natural balance) (blue bead – on Statement of Owner’s Equity, red bead – gets a closing entry); (R) Revenue / Sales / Fees Earned (small green bead on credit side / natural balance) (green bead – on Income Statement, red bead – gets a closing entry); (E) Expenses (small green bead on debit side / natural balance)(green bead – on Income Statement, red bead – gets a closing entry)} (CE) Closing Entry (red bead); (FIFO) First In First Out (red, gold, peach, green, blue beads) (LIFO) Last In First Out – so to remember how to do it - if it is FIFO you think of it in this order – red, gold, peach, green, blue, if it is LIFO you think of it in reverse (blue, green, peach, gold, red). Ta Da!
Also - the debit side is the left and the credit side is the right.
