Chapter 3_IFRS_POSTED (4).pptx

Chapter 3_IFRS_POSTED (4).pptx - Chapter Three The...

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Chapter Three The Accounting Information System
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Where we have come from… We started off looking at the financial statements, which is the end product of all the ACCOUNTING Now we are going to delve into the accounting itself.
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In this chapter we will learn… What are accounting transactions? How to record and analyze transactions Steps in the Recording Process Illustration of the recording process The Trial Balance
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Accounting Transactions Events that require recording in the financial statements What events require reporting? The business purchased a computer The business hired a new employee The business paid the new employee The business received a bill for monthly utilities used
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How do we know when to record an event? Remember the accounting equation? Assets = Liabilities + Stockholder’s Equity Any economic event that changes Assets, Liabilities or S/E requires recording.
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The Balance Sheet Equation We are going to analyze some transactions to determine whether or not they create an economic event that impacts the accounting equation.
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Investment of Cash by Stockholders 1. On January 1, 2014, the Owner invested $20,000 cash in exchange for common stock. = + CommonStock + Cash Supplies Prepaid Expesnes Equip Office Equipment Notes Payable Accounts Payable Unearned Revenue Revenues - Expenses - Dividends 1 20,000 20,000 RetainedEarnings Liabilities Assets StockholdersEquity
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Note Issued in Exchange for Cash 2. Company borrowed $10,000. = + CommonStock + Cash Supplies Prepaid Expesnes Equip Office Equipment Notes Payable Accounts Payable Unearned Revenue Revenues - Expenses - Dividends 1 20,000 20,000 2 10,000 10,000 TOTAL 30,000 = 10,000 + 20,000 RetainedEarnings Liabilities Assets StockholdersEquity
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Purchase of Office Equipment for Cash 3. Paid $5,000 for a new piece of equipment. = + CommonStock + Cash Supplies Prepaid Expesnes Office Equipment Notes Payable Accounts Payable Unearned Revenue Revenues - Expenses - Dividends 1 20,000 20,000 2 10,000 10,000 3 (5,000) 5,000 TOTAL 25,000 5,000 = 10,000 + 20,000 RetainedEarnings Liabilities Assets StockholdersEquity
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Receipt of Cash Advance from Customer 4. Received a $1,000 cash advance from Big Bird. NOTE: not earned because hasn’t performed the work yet!! = + CommonStock + Cash Supplies Prepaid Expesnes Office Equipment Notes Payable Accounts Payable Unearned Revenue Revenues - Expenses - Dividends 1 20,000 20,000 2 10,000 10,000 3 (5,000) 5,000 4 1,000 1,000 TOTAL 26,000 5,000 = 10,000 1,000 + 20,000 RetainedEarnings Liabilities Assets StockholdersEquity
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Services Provided for Cash 5. Received $13,000 for services provided to Grover. = + CommonStock + Cash Supplies Prepaid Expesnes Office Equipment Notes Payable Accounts Payable Unearned Revenue Revenues - Expenses - Dividends 1 20,000 20,000 2 10,000 10,000 3 (5,000) 5,000 4 1,000 1,000 5 13,000 13,000 TOTAL 39,000 5,000 = 10,000 1,000 + 20,000 13,000 RetainedEarnings Liabilities Assets StockholdersEquity
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Payment of Rent 6. Paid $6,000 rent.
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