PP ACC 301 Ch 3 Power point - Accounting Information System Accounting information system Collects and processes transaction data Disseminates 3-1 the

PP ACC 301 Ch 3 Power point - Accounting Information System...

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3-1 Accounting information system Collects and processes transaction data. Disseminates the financial information to interested parties. Accounting Information System LO 1 Understand basic accounting terminology.
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3-2 LO 2 Explain double-entry rules. An a ccount shows the effect of transactions on a given asset, liability, equity, revenue, or expense account. Double-entry accounting system (two-sided effect). Recording done by debiting at least one account and crediting another. DEBITS must equal CREDITS . Debits and Credits Accounting Information System
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3-3 Account Name Debit / Dr. Credit / Cr. Debits and Credits An arrangement that shows the effect of transactions on an account. Debit = “Left” Credit = “Right” Account Account LO 2 Explain double-entry rules. An Account can An Account can be illustrated in a be illustrated in a T-Account form. T-Account form.
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3-4 Account Name Debit / Dr. Credit / Cr. LO 2 Explain double-entry rules. $10,000 Transaction #2 $3,000 $15,000 8,000 Balance Transaction #1 Transaction #3 If the sum of Debit entries are greater than the sum of Credit entries, the account will have a debit balance. Debits and Credits
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3-5 Account Name Debit / Dr. Credit / Cr. If the sum of Credit entries are greater than the sum of Debit entries, the account will have a credit balance. LO 2 Explain double-entry rules. $10,000 Transaction #2 $3,000 $1,000 8,000 Transaction #3 Balance Transaction #1 Debits and Credits
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3-6 Normal Balance Credit Normal Balance Credit Normal Balance Debit Normal Balance Debit Debits and Credits Summary LO 2 Explain double-entry rules.
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3-7 Balance Sheet = + - Asset Liability Equity Revenue Expense Debit Credit Debits and Credits Summary LO 2 Explain double-entry rules. Income Statement
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3-8 The Accounting Equation LO 2 Explain double-entry rules. Relationship among the assets, liabilities and stockholders’ equity accounts of a business: The equation must be in balance after every transaction. For every Debit there must be a Credit . Illustration 3-3
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3-9 Double-Entry System Illustration Assets Assets Liabilities Liabilities Stockholders’ Equity Stockholders’ Equity = + 1. Owners invest $40,000 in exchange for common stock. + 40,000 + 40,000 LO 2 Explain double-entry rules.
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3-10 Assets Assets Liabilities Liabilities = + 2. Disburse $600 cash for secretarial wages. - 600 - 600 (expense) LO 2 Explain double-entry rules. Stockholders’ Equity Stockholders’ Equity Double-Entry System Illustration
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