This video deals with reducing accounts or rectifying accounts, which are accounts that belong to a group of balance sheet accounts (assets, liabilities or equity) but, instead of adding the values, they reduce the book value of the group to which they belong. Definition (00:09) and examples of reducing accounts (00:25) INITIAL EVENTS (02:26) 1. (02:26) Formation of the company with a capital of $200,000. Of this amount, $120,000 was paid in and placed in cash. The remainder remains as outstanding capital. 2. (03:06) Acquisition of a machine worth $7,000 with cash resources. 3. (03:32) Acquisition of inventory worth $30,000 with cash resources. 4. (03:56) Financing of a commercial space worth $100,000. This amount includes a rate of 12%, referring to passive interest ($12,000), reducing assets (04:59) Preparation of the Beginning Balance Sheet CARRYING OUT OPERATIONS (07:35) 5. (07:35) Sale of material in the amount of $40,000. Of this sale: $10,000 paid in cash and $30,000 will be paid in the future and debited to the customers account 6. (08:19) The cost of goods sold was $20,000, removed from inventory. REDUCING ASSETS (09:00) 7. (09:00) Accounting for accumulated depreciation (after one year) Buildings: $88,000 - 25 years - per year: $3,520 Machinery: $7,000 - 5 years - per year: $1,400 Sum $4,920 8. (09:49) Based on losses incurred in previous years, the company estimates that 5% of the value of the customer bill will not be paid. Current account value: $30,000, so estimated losses on doubtful accounts will be recorded at (5% of $30,000) $1,500 See more about this reduction to net realizable value in this video about historical cost variations ( • 23 - Historical cost variations (Co... ) 9. (10:40) A new competitor has appeared on the market and our selling price needed to be readjusted with repercussions on the carrying value of the inventory (new net realizable value: $8,000). In other words: loss due to adjustment to net realizable value in the amount of $2,000. REDUCING NET WORTH (11:34) 10. (11:34) Following the current situation and observing the legislation, the company's board of directors decided to repurchase some of the company's own shares to keep them in treasury. The acquisition value was $ 26,000 with cash resources Determination of the result of the year (12:14) Updating the Balance Sheet (13:22) Adding reducing accounts to the balance sheet (14:10) Finalizing and adjusting the totals (16:29) ----------------------------------------- On this Professor Quintino website (https://professorquintino.com.br), you will find the channel's videos organized by discipline and in sequence, according to the syllabuses Visit: https://professorquintino.com.br ------------------------------------------- ???? Subscribe to the channel at this link: ???? https://www.youtube.com/@professorqui... -------------------------------------------- In the following list, there are the links to access the videos, organized in order, according to the main syllabuses of the disciplines explored on the channel. ???? Video that brings together all subjects: • Video links, organized in sequence... ???? Basic Accounting: • Basic Accounting. Video links... ???? Intermediate Accounting: • Intermediate Accounting. Video links... ???? Advanced Accounting: • Advanced Accounting. Video links... ???? Cost Accounting: • Cost Accounting. Video links... ???? Tax Accounting: • Tax Accounting. Video links... ???? Accounting Theory: • Accounting Theory. Video links... ???? Analysis of Accounting Statements: • Analysis of Accounting Statements. ... ???? Economics: • Economics. Video links, in sequence... ???? Financial and Capital Market: • Financial and Capital Market. Video links... ???? Financial Education: • Financial Education. Video links... ------------------------------------------------------