copyright 2003-2023 Study.com. Once you have filled out the form, the software automatically creates the accounting record. list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named. WebNotes Payable Journal Entry Overview. Introduction to Finance, Accounting, Modeling and Valuation, Accounting 101: What You Need to Know for a Successful Business, Accounting 101: What You Need to Know For a Successful Business, Finance vs Accounting: An Art and a Science, Ace Your Interview With These 21 Accounting Interview Questions. (1) Transactions are recorded in the journal It will then become a short-term liability. (Check all that apply). To record a dividend payment made in December, 1. Journal entry definition AccountingTools This website helped me pass! It recorded the transaction by increasing assets and increasing liabilities. Noodlecake signs a contract with an independent developer for program code for a game app which will not be received until two months from the signing the contract. Although recording journal entries can be very monotonous and repetitive, recording accurate entries at the right time is imperative for companies to show their correct financial status to not only people within the firm but also to external users. Entry 2: Word about the business, which will be opening soon, spreads throughout the community, and Jareds Construction Corner grabs the attention of some commercial construction crews. Please seek advice to your accountant so that youll be guided with the correct account to use when creating a Journal entry. (3) Purchasing a Accounts Payable has a credit balance of $3,500. Is this activity an investing activity or a financing activity? MMM Pizza purchased a $25,000 pizza delivery truck in exchange for a 4-year promissory note. Journal entries are also helpful in organizing accounts payable, accounts receivable, and expenses in connection with inventory. A short-term note can be created from a loan. A common practice for government entities, particularly schools, is to issue short-term (promissory) notes to cover daily expenditures until revenues are received from tax collection, lottery funds, and other sources. A business may choose this path when it does not have enough cash on hand to finance a capital expenditure immediately but does not need long-term financing. The business may also require an influx of cash to cover expenses temporarily. Which of the following accounting cycle steps describes the process of recording journal entries? Interest is now included as part of the payment terms at an annual rate of 10%. The asset has a value of $60,000 and you agree to pay $1,000 principal and 10% annual interest monthly. Summarize in the ledger (T-accounts) Immediately after Thanksgiving, JCC sells out of a few key items. He does this instead of paying himself, which reduces his overall tax liability. What is the effect on total assets when a company buys a building in exchange for a 20-year note payable? X Company reported its damaged equipment at an amount lower than it originally cost For example, if a company bought a car, its assets would go up by the value of the car. For example, some car dealers are willing to sell automobiles with no down payment if they are carrying too much inventory. Accounts _______ is a liability account and represents amounts owed to suppliers. When Sierra pays cash for the full amount due, including interest, on October 31, the following entry occurs. You can include as much detail as youd like. Tristar paid $100,000 in cash for the property. On May 1, Lord of the Fries will ___________, Noodlecake pays $300 cash to create the company's logo. To record the accrual of a utility expense, 1. Entry 10: JCC has more sales totaling US$5,500, and the cost of goods sold was US$5,100. Journal entry to record the purchase of equipment This data can be very useful, especially because it may reveal that the cost of goods sold in this situation was a little bit too high. Chapter 7 Flashcards | Quizlet In many cases, the interest rate is lower than long-term debt, because the loan is considered less risky with the shorter payback period. So he decides to offer classes that teach homeowners how to do simple repairs and maintenance around the house, such as basic plumbing, caulking, and yard work. At the end of note maturity, we need to make the payment to the holder of the note in order to honor the promissory note that we have issued. ABC Company borrowed $300,000 from the bank. This typically occurs when the company is in a start-up stage and needs outside professional services to set up the corporation, review contracts, perform accounting services, etc. Our mission is to improve educational access and learning for everyone. According to appraisals, the land had a fair value of $75,000 and the building had a fair value of $45,000. The Accounts Payable ending balance equals a ______________ balance. Since Sierra paid the full amount due, Short-Term Notes Payable decreases (debit) for the principal amount of the debt. Non-current liabilities Therefore, they make a compound entry in the journal to make it clear that both interest and principal are being paid. Every transaction involves a(n) ___________. This is posted to the Equipment T-account on the debit side. (Select all that apply). For some businesses, no, but for others it is an essential entry in their accounting journal for accounting, operational analysis, and tax reporting purposes. This journal entry is made to eliminate the interest payable that we have recorded above as well as to account for the cash outflow for the interest payment on the note payable. List the steps in the accounting cycle in chronological order. This is what the journal entry could look like: Entry 7: As the holiday season continues to ramp up, Jared realizes he needs to hire another worker. WebOn December 31, 2020, Wright Enterprises purchased $7,000 of merchandise inventory on a one-year 12% note payable. What is the effect of recording this transaction on the company's total assets? Entry 6: JCC needs to purchase some basic supplies for use around the store, such as pens, printer paper, and staples. Entries Related to Notes Payable | Financial Accounting - Lumen The journal entry to record this transaction would include a ___________ for $300. Analyzing each transaction is similar to creating a brief narrative about the impact of the transaction on the company. A classified balance sheet shows subtotals for current _________ and current _____________. The journal entry (followed by the explanation recorded in the general journal) for such a transaction is: The note will be classified as a long-term liability on your company's balance sheet until one year before its maturity date. Interest-bearing note payable is the type of promissory note that we issue to the holder of the note with the interest attached. When you record the purchase, QuickBooks debits the asset account for $1,000 and credits cash for $1,000. Likewise, the journal entry for interest-bearing notes payable in this case will increase both total assets and total liabilities on the balance sheet. This payable account would appear on the balance sheet under Current Liabilities. The entry at the acquisition date is: Notice the note is now split into a short-term and long-term portion on the classified balance sheet. The company may consider a short-term note payable to cover the difference. Mortgage payable (due in 25 years). The journal entry is debiting fixed assets $ 13,000 and credit accounts payable $ 13,000. (3) Exchange of promises Notes Payable | Definition, Journal Entries, and Examples On August 31, the supplier renegotiates terms with Sierra and converts the accounts payable into a written note, requiring full payment in two months, beginning September 1. The beginning balance in Acme's Accounts Payable was $4,000. Journal entries are a fundamental aspect of accounting because they track money that is coming and going. Example. Credit terms were 2/10, n/30, invoice date August 1. WebThis journal entry of accrued interest on note payable will increase total expenses on the income statement and total liabilities on the balance sheet by the same amount of $500 as We can make the journal entry for purchasing equipment with note payable by debiting the equipment account as a fixed asset on our balance sheet and crediting the notes payable account as a liability that we owe to Entry 5: Business is going very well, and during the holiday season, theres a spike in sales. If you are redistributing all or part of this book in a print format, I feel like its a lifeline. When it comes time to journal business transactions, you are, essentially, putting your analysis of each transaction into writing. A short-term note is classified as a current liability because it is wholly honored within a companys operating period. (Check all that apply). An easy way to understand journal entries is to think of Isaac Newtons third law of motion, which states that for every action, there is an equal and opposite reaction. Below is the journal entry for the first payment Jared makes for his new, seasonal service representative. This field is indented if it is for the account being credited. The payment of the notes payable journal entry will decrease both total assets and total liabilities on the balance sheet. The current ratio equals ______________ _____________ divided by ______________ ___________. Notes payable is a promissory note that represents the loan the company borrows from the creditor such as bank. Promissory Notes: Time to Issue More Debt? A journal entry is when you make a record of a transaction that happens in connection with your personal or business accounts. Therefore, the journal entry would look like this: DR Cash 300,000 CR Bank Loan Payable 300,000 Example 2 Purchasing equipment journal entry Purchased Accounting for Governmental Operating Activities Illustrative Accounts Payable decreases (debit) and Short-Term Notes Payable increases (credit) for the original amount owed of $12,000. We can make the journal entry for interest-bearing note payable by debiting the asset account and crediting the notes payable account on the day that we issue the note. For the purpose of this journal entry example, all compressors are entered into one entry. Which of the following are considered business documents? Interest Expense is found from our earlier equation, where Interest = Principal Annual interest rate Part of year ($12,000 10% [2/12]), which is $200. The cash is debited at the acquisition of the note and the installment note payable is credited. (Check all that apply). List the components of a classified balance sheet in the proper order in accordance with GAAP. With all of this information combined in one entry, you get a convenient snapshot of the transaction and how it impacted your companys finances. Mark has a doctorate from Drew University and teaches accounting classes. Purchase Accounts Payable may be converted into a short-term notes payable, if there is a default on payment. Notes Payable - Learn How to Book NP on a Balance Sheet Jared could use this data in the future while analyzing his profit margins, as well as other factors impacted by the cost of goods sold. Record a journal entry then you must include on every physical page the following attribution: If you are redistributing all or part of this book in a digital format, Try refreshing the page, or contact customer support. (5) Only transactions that involve cash, (1) Purchase of equipment on account What would you do if you found your school in this situation? Purchased land costing $50,000 and buildings costing $400,000. - Definition and Use to Categorize Transactions, Ledgers and Chart of Accounts: Definitions and Use, Understanding Debits and Credits in Accounting, Recording Business Transactions in Accounting, Using the Accounting Equation: Analyzing Business Transactions, Journal Entries and Trial Balance in Accounting, What Are Capital Resources? To determine the final monetary value of accounts listed on the financial statements on the companys year-end, multiple journal entries are recorded and tracked in an account called a T-account, which is a visual representation of a general ledger account. Since CBS paid on May 10, they made the 10-day window and thus received a discount of 5%. follow the accounting cycle To record the purchase of ten new air compressors, with a combination of cash and credit, that were added to inventory. As can be seen the debit is to cash as the installment note was issued in respect of new borrowings, and cash is received by the business. Likewise, at the period-end adjusting entry, we need to recognize the accrued interest expense that has already occurred. All other trademarks and copyrights are the property of their respective owners. total assets remain the same. Short-term debt may be preferred over long-term debt when the entity does not want to devote resources to pay interest over an extended period of time. OpenStax is part of Rice University, which is a 501(c)(3) nonprofit. Close the books. The journal entries would be as follows: The Difference Between Accounts Payable and Notes Payable. During the month, Lucre borrowed $5,000 cash from Last National Bank and paid a supplier $500. c. The city of New York pays a salary to a policeman. Accounts Payable Journal Entries | Most Common Types & Examples The asset has a value of $60,000 and you agree to pay $1,000 principal and 10% _________ financing is obtained from creditors and ___________ financing is obtained from owners. School boards approve the note issuances, with repayments of principal and interest typically met within a few months. Because this is a loan, the business has to pay US$35 in interest as well. For example, when you generate a sale for cash, this increases both the revenue account and the cash account. Match invoices to trade-ins and discounts on the purchase order from the supplier portal. To record the purchase of Computer 2022-3 added to inventory. He is a writer, editor and has experience in public and private accounting. An adjusting entry is used at month-end to alter the financial statements to bring them into compliance with the relevant accounting framework, such as Generally Accepted Accounting Principles or International Financial Reporting Standards. Later, when we make the interest payment on the note payable, we can make another journal entry with the debit of the interest payable account and the credit of the cash account. In May, Pizza Aroma ordered $1,200 of supplies and promised to pay the supplier next month. The journal entry to record the issuance of the note is: Since the note will mature in one-year, it is recorded as a short-term liability on the classified balance sheet. Also, the creation of the note payable creates a stronger legal position for the owner of the note, since the note is a negotiable legal instrument that can be more easily enforced in court actions. To learn more, launch our free accounting courses. Which of the following are true about Notes Payable and Accounts Payable? - Definition & Examples, What Are Fixed Assets? With the help of a spreadsheet or accounting software, you can also use journal entries to track trends relating to money spent and money received. Because this is most likely only a seasonal hire, Jared doesnt want to include it in his regular payroll accounting. if current assets are large enough to pay current liabilities. Additionally, you will learn how to classify notes payable on the balance sheet. The vendor believes the note will put it in a better legal position or will spur the customer to pay through moral suasion (psychological pressure). The interest expense for the first month is calculated as 1/10th of the outstanding principal of $60,000 divided by twelve (6,000 12 = 500: number of months in the year). may have trouble paying its bills on time. A reversing entry is typically an adjusting entry that is reversed as of the beginning of the following period, usually because an expense was to be accrued in the preceding period, and is no longer needed. Note payable (due in 5 months) Likewise, we may issue the note payable to purchase equipment from our vendor. When the note is paid in one-year, the journal entry is: If the interest had been accrued over the course of the year, the debit recording of the payment of the interest would be made to accrued interest payable, and not interest expense. It helped me pass my exam and the test questions are very similar to the practice quizzes on Study.com. Loan Maturity Date Definition & Examples | What is a Loan Maturity Date? Paid $100,000 in cash and signed a note payable for the balance. The general ledger is then used to create financial statements for the business. Journal entry for purchasing equipment with note payable The asset is debited for the amount paid plus the amount owed. Of course, it can even be more than one year for a long-term note payable. List from top to bottom. However, revenues distributed fluctuate due to changes in collection expectations, and schools may not be able to cover their expenditures in the current period. This shorter payback period is also beneficial with amortization expenses; short-term debt typically does not amortize, unlike long-term debt. How to Write a Journal Entry: 14 Examples - Udemy Blog 2. This template contains the accounts normally debited and credited, so that you can easily fill it out when creating a new entry. - Definition & Rules, Working Scholars Bringing Tuition-Free College to the Community. Typical steps needed before a business can start selling goods/services to customers include: Burrows, Inc. borrowed $100,000 from Last Bank by signing a formal agreement to repay the bank in 10 years. The December 31, 2018 balance must equal $____________________. WebJournal Entries for Notes Payable Lets discuss the various instances of notes payable with examples in each of the following circumstances: Issued Notes Payable for cash If Ram Inc Enrolling in a course lets you earn progress by passing quizzes and exams. We paid half last year and Train The Trainer Cna Instructor Course In Alabama, Positive Displacement Pump Vs Centrifugal Pump. Notes Payable. The balance in the subsidiary ledger will equal the balance of its supported As a result of the error,: total liabilities are too low X Company reported its inventory at its current market value, which is lower than its original cost, Liabilities that will be paid or fulfilled within 12 months are ______ liabilities. It includes the payments of ten different homeowners, equaling US$150. The beginning balance in Lucre's Cash account was $1,200. After making your journal entries, you can then move on to recording the transactions in ledger accounts, which is the following step in the accounting cycle. How to determine the amount of each equipment depreciation journal entry? For example, we run a merchandising business that uses the perpetual inventory system and our accounting period ends on December 31. General Motors builds a new auto factory in North Carolina. d. The federal government sends a Social Security check to your grandmother. Notes payable can be issued to acquire property. How to Calculate the Funded Status of a Pension Plan, Interest Expense Formula | How to Calculate Interest Expense, Issuing Premium & Discount Bonds | Process, Advantages & Disadvantages, Journal Entry for Perpetual Inventory System | Types, Steps & Examples, Disclosure Requirements for Cash Flow Statements. WebTwo of the most common subsidiary ledgers are for Accounts Payable and Accounts Receivable. MMM Pizza bought and received $1,500 of supplies purchased on account. The journal entry to record the purchase of land for $30,000 cash includes _______________. Installments note payable In this $10,000 promissory note, we promise to pay back this amount with a 10% annual interest on June 30. Purchase Discount Journal Entry Again, this transaction gets recorded when you write the check to pay for the asset. structure and function of flowering plants ppt. WebThe following entry occurs. 1. This journal entry example is going to include the amount of money the company earned off the sale (US$10), the cost of goods sold (US$5), an entry for the revenue earned, and one for the impact the sale had on inventory. and Record Transactions for Merchandise The company recorded a $100,000 increase in the Building account and a $100,000 decrease in Cash. On July 1, 2021, we issue a 6-month promissory note to one of our suppliers in exchange for the $10,000 merchandise goods. (2) Transactions are posted to the ledger The conversion entry from an account payable to a Short-Term Note Payable in Sierras journal is shown. What is the effect on the accounting equation? WebWe will begin with two T-accounts: Cash and Notes Payable. 12.4 Prepare Journal Entries to Record Short-Term Notes Payable How to Do a Journal Entry for Purchases on a Notes Payable The effect of journal entries on each account is summarized in the: Which of the following are non-current assets that are found on the balance sheet? Below is the journal entry for his first class taught. Note payable (due in 5 years) Accounts Receivable Journal Entry Purpose & Examples | What Does Accounts Receivable Mean? In this case, we can make the journal entry for the interest expense on the note payable when we make the interest payment on the note, by debiting the interest expense account and crediting the cash account directly. (2) Is the unrealized gain (or loss) on the portfolio of available-for-sale securities reported on the income statement? There are three basic steps when making a journal entry, and writing the actual entry itself comes last. To record the purchase of Computer 2022-1 added to inventory. (2) Financing activities You need enough money to cover your expenses until you get your next paycheck. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Which accounts are affected by the transaction, For each account, determine if it is increased or decreased, For each account, determine how much it is changed, Make sure that the accounting equation stays in balance, The accounts affected are cash (asset) and bank loan payable (liability). The $40,000 payment is due on September 1,2025 . Create your account, 25 chapters | total assets are too low. There is a written promise to pay the principal balance and interest due on or before a specific date. Select all that apply), A stockholders' equity account decreases by $100 To record the issuance of common stock. The bank will examine your company's creditworthiness, collateral, ability to make loan payments, and other factors before agreeing to lend it money. (Check all that apply), Company has the ability to pay its current liabilities While this may seem like the easiest step, it is also one that is commonly overlooked. A journal entry is used to record a business transaction in the accounting records of a business. To learn more about how to use accounting to succeed in business, check out Accounting 101: What You Need to Know for a Successful Business. As a result, the company's asset Cash must be increased by $5,000 and its liability Notes Payable must be increased by $5,000. As a result, this could lead companies and investors to make decisions based on false, misleading information, leading to negative ramifications. succeed. A Beginner's Guide to Notes Payable - The Motley Fool company's current assets are larger than its current liabilities. The Mortgage Payable account is increased with an entry on the ______ right side of the T-account. Journal Entries Guide - Corporate Finance Institute Journal Entry (4) Investing activities Of course, if the interest-bearing note payable is a type of short-term note which ends during the accounting period, we can record the interest expense when we make the interest payment. WebIn the journal entry, Equipment has a debit of $3,500. If a company's current assets are less than its current liabilities, the company ____________. To record the purchase of three computers added to inventory. Mechanics of the Accounting Cycle: Help and Review, Bonds & Notes Payable Accounting: Entries & Financial Disclosures, Psychological Research & Experimental Design, All Teacher Certification Test Prep Courses, Introduction to Accounting: Help and Review, Financial Statements in Accounting: Help and Review, The Accounting Equation: Definition & Components, Source Documents in Accounting: Definition and Purpose, What Are Accounts? Entering equipment purchase with a loan Last year, we purchased some equipment from another company on a personal note of 24,000. Thus, journal entries are not used to record high-volume activities. To record the pay of seasonal employee. Download the free Excel template now to advance your finance knowledge! The company has purchased the equipment, and it has already been received. Entry 13: Journal entries can also document depreciation. are licensed under a, Prepare Journal Entries to Record Short-Term Notes Payable, Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting, Identify Users of Accounting Information and How They Apply Information, Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities, Explain Why Accounting Is Important to Business Stakeholders, Describe the Varied Career Paths Open to Individuals with an Accounting Education, Describe the Income Statement, Statement of Owners Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate, Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses, Prepare an Income Statement, Statement of Owners Equity, and Balance Sheet, Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements, Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions, Define and Describe the Initial Steps in the Accounting Cycle, Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements, Use Journal Entries to Record Transactions and Post to T-Accounts, Explain the Concepts and Guidelines Affecting Adjusting Entries, Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries, Record and Post the Common Types of Adjusting Entries, Use the Ledger Balances to Prepare an Adjusted Trial Balance, Prepare Financial Statements Using the Adjusted Trial Balance, Describe and Prepare Closing Entries for a Business, Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity, Appendix: Complete a Comprehensive Accounting Cycle for a Business, Compare and Contrast Merchandising versus Service Activities and Transactions, Compare and Contrast Perpetual versus Periodic Inventory Systems, Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System, Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System, Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods, Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies, Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System, Define and Describe the Components of an Accounting Information System, Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders, Analyze and Journalize Transactions Using Special Journals, Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems, Analyze Fraud in the Accounting Workplace, Define and Explain Internal Controls and Their Purpose within an Organization, Describe Internal Controls within an Organization, Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries, Discuss Management Responsibilities for Maintaining Internal Controls within an Organization, Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries, Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements, Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions, Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches, Determine the Efficiency of Receivables Management Using Financial Ratios, Discuss the Role of Accounting for Receivables in Earnings Management, Apply Revenue Recognition Principles to Long-Term Projects, Explain How Notes Receivable and Accounts Receivable Differ, Appendix: Comprehensive Example of Bad Debt Estimation, Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions, Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method, Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method, Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet, Examine the Efficiency of Inventory Management Using Financial Ratios, Distinguish between Tangible and Intangible Assets, Analyze and Classify Capitalized Costs versus Expenses, Explain and Apply Depreciation Methods to Allocate Capitalized Costs, Describe Accounting for Intangible Assets and Record Related Transactions, Describe Some Special Issues in Accounting for Long-Term Assets, Identify and Describe Current Liabilities, Analyze, Journalize, and Report Current Liabilities, Define and Apply Accounting Treatment for Contingent Liabilities, Record Transactions Incurred in Preparing Payroll, Explain the Pricing of Long-Term Liabilities, Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method, Prepare Journal Entries to Reflect the Life Cycle of Bonds, Appendix: Special Topics Related to Long-Term Liabilities, Explain the Process of Securing Equity Financing through the Issuance of Stock, Analyze and Record Transactions for the Issuance and Repurchase of Stock, Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits, Compare and Contrast Owners Equity versus Retained Earnings, Discuss the Applicability of Earnings per Share as a Method to Measure Performance, Describe the Advantages and Disadvantages of Organizing as a Partnership, Describe How a Partnership Is Created, Including the Associated Journal Entries, Compute and Allocate Partners Share of Income and Loss, Prepare Journal Entries to Record the Admission and Withdrawal of a Partner, Discuss and Record Entries for the Dissolution of a Partnership, Explain the Purpose of the Statement of Cash Flows, Differentiate between Operating, Investing, and Financing Activities, Prepare the Statement of Cash Flows Using the Indirect Method, Prepare the Completed Statement of Cash Flows Using the Indirect Method, Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency, Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method, Short-Term Promissory Note.