Reading Notes Chapter 5

Reading Notes Chapter 5 - September 21, 2007 Chapter 5- The...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
September 21, 2007 Chapter 5- The Recording Process 1. The Account 1. Transactions of entity summarized in individual accounts 1. Account: a place to group and summarize all of the transactions that affect an item 1. Separate account for individual asset 2. Liability 3. Revenue 4. Expense 5. Gain 6. Loss 7. Common stock and retained earnings 2. Debits and credits are terms used to identify left and right sides of the account ONLY 2. Double Entry Method 1. Assets = liabilities + stockholders equity 1. Increases in assets on the left side and decreases in assets are on the right column 2. Increases in liabilities and equity are recorded in the right column and decreases in liabilities are on the left column 2. Double entry based on the accounting equation 1. Like algebra if increase on the left, increase on the right to maintain the two sides of the equations equal to each other 2. Accounting equation = assets = liabilities + stockholders equity 3. The total dollar amount of the debits must always equal the total dollar amount of the credits 1. Total debits = total credits 4. Assets = liabilities + common stock + revenues – expenses – dividends^2 1. Revenues, expenses, and dividends all affect stockholders’ equity 1. Increases in stockholders equity in the right side
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2. Revenues increase stock holders equity 1. Revenues credited when they increase 3. Dividends and expenses decrease stockholders equity 1. Dividends and expenses debited (left side) when they increase 5. Rules of Debit and Credit: 1. Increase asset, debit account 2. Decrease asset, credit account 3. Increase liability credit account 4. Decrease liability debit account 5. Increase stockholders equity credit account 6. Decrease stockholders equity debit account 7. Increase revenue credit account 8. Decrease revenue debit account 9. Increase expenses debit account 10. Decrease expenses credit account 11. Increase dividends debit account 12. Decrease dividends credit account
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/14/2008 for the course ACCT 209 taught by Professor Stasny during the Spring '08 term at Texas A&M.

Page1 / 6

Reading Notes Chapter 5 - September 21, 2007 Chapter 5- The...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online