Chapter 2 Lecture Notes.docx - FUNDAMENTAL QUALITATIVE...

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FUNDAMENTAL QUALITATIVE CHARACTERISTICS Relevance Has to make a difference in your decision Predictive Value Materiality Big use of information E.g $100,000 is material ACCOUNTING INFORMATION SYSTEMS Inputs → Processing → Outputs THE ACCOUNTING CYCLE 1) Transaction Analysis 2) Journal Entry 3) Post to Leger 4) Trial Balance 5) End of period adjusting entries 6) Adjusted Trial Balance 7) Financial Statement 8) Closing Entries 9) Post - Closing Trial Balance BUSINESS TRANSACTIONS VS. ACCOUNTING TRANSACTION As long as it affects the assets, liabilities, equity, revenues, expenses and dividends - it is an accounting transactions. Hiring is not an accounting transaction but a hiring bonus is. TRANSACTION ANALYSIS - E.G Purchasing $3000 sports equipment with CASH Identify the accounts Cash Equipment - Asset
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Determine the transaction for each account Cash is affected by $3000 and so is equipment Signs + OR - Cash decreased -$3000 Equipment increased +$3000
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