CHAPTER%2002%20POWER%20POINT%202009

CHAPTER%2002%20POWER%20POINT%202009 - CHAPTER 2 TRANSACTION...

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1 CHAPTER 2 TRANSACTION ANALYSIS
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2 TRANSACTION ANALYSIS -AS MANAGERS PREPARE FINANCIAL STATEMENTS THEY NEED TO IDENTIFY USERS OF F/S. -MANAGER NEEDS TO UNDERSTAND THE ACCTING PROCESS. -THEY NEED TO UNDERSTAND HOW TO PREPARE F/S.
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3 BASIC ACCOUNTING EQUATION: ASSETS = LIABILITIES + EQUITY ( COMMON SHARES + RETAINED EARNINGS) FOR EACH TRANSACTION 2 CHANGES TAKE PLACE IN THE EQUATION. AND THE EQUATION MUST BALANCE.
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4 WHAT ARE FINANCIAL TRANSACTIONS? PURCHASE INVENTORY PURCHASE SUPPLIES PAY FOR INVENTORY SELL INVENTORY COLLECT CASH BORROW MONEY SELL COMMON SHARES
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5 TRANSACTION ANALYSIS; 1. MZB INC. ISSUES (SELLS) COMMON SHARES OF THE COMPANY FOR $40,000 CASH. ASSETS = LIABILITIES + EQUITY CASH + COMMON SHARE + + 40,000 = + 40,000 2. MZB INC. PURCHASED SUPPLIES FOR $5,000 CASH. ASSETS = LIABILITIES + EQUITY SUPPLIES + + 5,000 = +0 + 0 CASH – - 5,000
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6 TRANSACTION ANALYSIS; 3. BORROWED $50,000 FROM THE BANK. ASSETS = LIABILITIES + EQUITY CASH + = BANK LOAN PAYABLE + + 50,000 = +50,0000 + 0 4. PURCHASED LAND FOR $80,000 CASH. ASSETS = LIABILITIES + EQUITY CASH- = 0 + 0 -80,000 LAND + +80,000
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7 TRANSACTION ANALYSIS; 5. MZB. INC. PURCHASED INVENTORY ON ACCOUNT THAT HAS A COST OF $30,000. ASSETS = LIABILITIES + EQUITY INVENTORY+ = ACCT PAYABLE + + 30,000 = +30,000 6. PURCHASED A COMPUTER FOR 4,500 CASH. ASSETS = LIABILITIES + EQUITY CASH -, COMPUTER + = 0 + 0 -4,500 +4,500 = 0 + 0
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8 TRANSACTION ANALYSIS; 7. PAID $30,000 OF THE ACCOUNTS PAYABLE (SEE TRANSACTION #5) . ASSETS = LIABILITIES + EQUITY CASH - = ACCT PAYABLE - 0 -30,000 = -30,000 8. PAID 1,200 CASH FOR AN INSURANCE POLICY , THAT GIVES COVERAGE FOR THE NEXT 12 MONTHS. ASSETS = LIABILITIES + EQUITY CASH - , PREPAID + = 0 + 0 -1,200 + 1,200 = 0 + 0
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9 TRANSACTION ANALYSIS; 9 . PAID ELECTRICAL BILL OF $500. ASSETS = LIABILITIES + EQUITY CASH - = 0 + R/E - ELECTRICITY EXP -500 = 0 - 500 10 . PAID RENT FOR THE MONTH AMOUNTING TO $1,500. ASSETS = LIABILITIES + EQUITY CASH - = 0 + R/E - RENT EXP -1,500 = 0 - 1,500
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10 TRANSACTION ANALYSIS CALCLATING AND ANALYSING INTEREST COSTS (EXPENSES) FORMULA: PRINCIPLE X INTEREST RATE X # DAYS / 365 DAYS (# MONTHS / 12 MONTHS) $50,000 X .05 X 1 MONTHS/12 MONTHS = 208.33 11. IN TRANSACTION #3 BORROWED $50,000 FROM THE BANK. THE TERMS OF THE LOAN ARE 5% INTEREST PAID AT END OF THE MONTH ASSETS = LIABILITIES + EQUITY - CASH = - R/E INTEREST EXP -208 = 0 - 208
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11 TRANSACTION ANALYSIS; 12. MZB INC. SALES WERE ALL CASH AT A SELLING PRICE OF $45,000. (SOLD ALL THE INVENTORY) ASSETS = LIABILITIES + EQUITY (COM STK + R/E)
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CHAPTER%2002%20POWER%20POINT%202009 - CHAPTER 2 TRANSACTION...

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