ACt 101 note week 2.docx - Accounting cycle two-step measurement/communication External transaction conducted between a company and separate economic

ACt 101 note week 2.docx - Accounting cycle two-step...

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Accounting cycle: two-step measurement/communication External transaction : conducted between a company and separate economic entity( purchasing supplies, selling product, pay salaries) Paying rent in advance cause one asset (repaid rent ) to increase and one asset ( cash) to decrease On account : pay in the future Deferred revenue : future revenue Account/cash receivable : to be received in the future Dividend increase retain earning decrease Six steps in Measuring External Transactions: (UAAsRPPre) 1 Use source document to identify accounts affected by an external transaction 2 Analyze the impact of the transaction on the accounting equation 3 Assess whether the transaction result in a debit or credit to account balances. 4 record the transaction results in a debit or credit to account balances 5 Post the transaction to the general ledger 6 Prepare a trial balance Compound transaction : transaction that affect more than two accounts The journal is a chronological record of the economic events that have taken place.
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