ACC 101_ EBOOK_CHAPTER 3.docx

ACC 101_ EBOOK_CHAPTER 3.docx - CHAPTER 3 Analyzing...

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CHAPTER 3 Analyzing Business Transactions Using T Accounts When Alexander Graham Bell invented the telephone in 1876, and gave birth to the company that would become AT&T, he had no idea that a century and a half later, millions of people worldwide would be relying on his “name-sake” to call, text, and e-mail the people in their lives. Since being formed in 1877, AT&T has broadened its offerings through new-product development and diversification. Recognized as one of the leading worldwide providers of IP- based communications services to business, AT&T also offers the greatest number of phones that work in most countries, the largest Wi-Fi network in the United States, and the largest number of high-speed Internet access subscribers in the United States. Keeping track of the multitude of transactions initiated by these services has been the job of the accountant. However, because the accounting equation-table is just too clumsy to be used in a company that has thousands upon thousands of transactions every month, accountants use a more streamlined recordkeeping approach. Accountants throughout the world rely instead on a double-entry system of debits and credits. thinking critically How might accountants in 1877 have recorded The Bell Telephone Company’s first telephone service revenue transaction? How did this transaction affect the fundamental accounting equation? LEARNING OBJECTIVES NEW TERMS 1. 3-1 Set up T accounts for assets, liabilities, and owner’s equity. 2. 3-2 Analyze business transactions and enter them in the accounts. 3. 3-3 Determine the balance of an account. 4. 3-4 Set up T accounts for revenue and expenses. 5. 3-5 Prepare a trial balance from T accounts. 6. 3-6 Prepare an income statement, a statement of owner’s equity, and a balance sheet. 7. 3-7 Develop a chart of accounts. account balance accounts chart of accounts classification credit debit double-entry system drawing account footing 1
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8. 3-8 Define the accounting terms new to this chapter. normal balance permanent account slide T account temporary account transposition trial balance page 52 Section 1 SECTION OBJECTIVES TERMS TO LEARN > > 3-1Set up T accounts for assets, liabilities, and owner’s equity. WHY IT’S IMPORTANT The T account is an important visual tool used as an alternative to the fundamental accounting equation. > > 3-2Analyze business transactions and enter them in the accounts. WHY IT’S IMPORTANT Accountants often use T accounts to help analyze and classify business transactions. > > 3-3Determine the balance of an account. WHY IT’S IMPORTANT Accurate account balances contribute to a reliable accounting system. account balance accounts classification footing normal balance T account Transactions That Affect Assets, Liabilities, and Owner’s Equity 2
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In this chapter, you will learn how to record the changes caused by business transactions. This recordkeeping is a basic part of accounting systems.
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  • Summer '17
  • Robinson
  • Balance Sheet, T Accounts, Double-entry bookkeeping system, Owner’s Equity Accounts

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