ACC301-ch02

ACC301-ch02 - chapter 2 A Review of the Accounting Cycle An...

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1 A Review of the  A Review of the  Accounting Cycle Accounting Cycle An electronic presentation An electronic presentation by Douglas Cloud by Douglas Cloud Pepperdine University Pepperdine University chapter chapter     2 2
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2 Learning Objectives 1. Identify and explain the basic steps in the accounting process (accounting cycle). 2. Analyze transactions and make and post journal entries. 3. Make adjusting entries, produce financial statements, and close nominal accounts. Continued
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3 Learning Objectives 4. Distinguish between accrual and cash- basis accounting. 5. Discuss the importance and expanding role of computers to the accounting process.
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4 The purpose of this chapter is to review the basic steps of the accounting process.
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5 Step 1 Step 1 Business Business documents documents analyzed analyzed Step 2 Step 2 Transactions Transactions recorded in recorded in journals journals Step 3 Step 3 Transactions Transactions posted to posted to ledgers ledgers Continued Continued Recording Process Overview of the Accounting Process
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6 Overview of the Accounting Process Step 5 Step 5 Adjustments Adjustments Work sheet Work sheet (optional) (optional) Continued Continued Step 4 Step 4 Trial balance Trial balance Steps in the Reporting Phase Continued from previous slide
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7 Step 7 Step 7 Adjustments Adjustments Step 6 Step 6 Financial statements Financial statements Steps in the Reporting Phase Step 8 Step 8 Post-closing trial Post-closing trial balance (optional) balance (optional) Overview of the Accounting Process
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8 Recording Phase A system of recording transactions in a way that maintains the equality of the accounting equation. Assets = Liabilities + Owners’ Equity or A = L + OE
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9 1. Analyzing Business Documents Transactions are the exchange of goods or services between entities, as well as other events that have an economic impact on a business. Business documents are records that are evidence of transactions.
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10 General Journal Entry Format Date Debit Entry. ................................. xx Credit Entry. ............................ xx Explanation. A journal is an accounting record in which business transactions are entered in chronological order. Journal entries record transaction information; debits equal credits . 2. Journalizing Transactions
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11 Every journal entry involves a three-step process: 1. Identify the accounts involved with an event or transaction. 2. Determine whether each account increased or decreased. 3. Determine the amount by which each account was affected. 2. Journalizing Transactions
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12 Assets = Liabilities + Owners’ Equity DR CR DR CR DR CR (+) (–) (–) (+) (–) (+) Capital Stock DR CR (–) (+) Retained Earnings DR CR (–) (+) Continued Continued Debits and Credits
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13 Debits and Credits Retained Earnings DR CR (–) (+) Expenses DR CR (+) (–) Revenues DR CR (–) (+) Dividends DR CR (+) (–)
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14 Date Description Post Ref. Debits Credits General Journal Page 24 2005 July 1 Dividends 330 25,000 Dividends Payable 260 25,000 Declared semiannual cash dividend on common stock.
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This note was uploaded on 06/11/2009 for the course ACC 301 taught by Professor Pendarvis during the Spring '09 term at St. Leo.

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ACC301-ch02 - chapter 2 A Review of the Accounting Cycle An...

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