Chapter 3 Notes

Chapter 3 Notes - = distributions by a corporation to its...

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Chapter 3 Accounting Information System = is the system of collecting and processing transaction data and communicating financial information to decision makers Accounting Transactions = economic events that require recording in the financial statements, occurs when assets, liabilities, or stockholders’ equity items change as a result of an event Transaction Analysis = process of identifying the specific effects of economic events on the accounting equation. An Account = individual accounting records of increases and decreases in a specific asset, liability, or stockholders’ equity item. o T-Account = they have account titles, a left side (debit), and a right side (credit) o Double Entry Accounting System = dollar amount of credits and dollar amount of debits must be equal in each transaction o Normal Balance = is the balance expected on an account (either debit or credit) found on the side that increases a particular account Reduce Stockholder’s Equity o Dividends
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Unformatted text preview: = distributions by a corporation to its stockholders in an amount proportional to each investor’s percentage ownership o Expenses • Recording Process o Transactions are analyzed and put into a journal. Then the journal information is transferred to appropriate accounts in the ledger o Journal = place where a transaction is initially recorded before it is transferred to the accounts Entered in chronological order o Posting = is the procedure of transferring journal entries to ledger accounts. o Ledger = is the entire group of accounts maintained by a company o General Ledger = contains all assets, liabilities, and stockholders’ equity o Chart of Accounts = listing of all ledger accounts used in the business o Trial Balance = list of accounts and their balances at a given time Usually prepared at the end of an accounting period Helps uncover errors in journalizing and posting Useful in preparation of financial statements...
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This note was uploaded on 03/27/2008 for the course ACCT 100 taught by Professor Punke during the Spring '08 term at Wisconsin.

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