acc.ch2 - The Navigator Chapter 2 Scan Study Objectives...

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Chapter 2 T HE RECORDING PROCESS CHAPTER STUDY OBJECTIVES After studying this chapter, you should be able to: 1. Explain what an account is and how it helps in the recording process. 2. Define debits and credits and explain how they are used to record business transactions. 3. Identify the basic steps in the recording process. 4. Explain what a journal is and how it helps in the recording process. 5. Explain what a ledger is and how it helps in the recording process. 6. Explain what posting is and how it helps in the recording process. 7. Prepare a trial balance and explain its purposes. The Navigator PREVIEW OF CHAPTER 2 In Chapter 1, we analyzed business transactions in terms of the accounting equation and presented the cumulative effects of these transactions in tabular form. In this chapter, we will introduce and illustrate the basic procedures and records that are used. The organization and content of the chapter are as follows: RECORDING PROCESS The Account Debits and credits Journal Ledger Summary journalizing and posting Limitations of a trial balance Locating errors Use of dollar signs illustrations of THE Steps in the Recording Process The Recording Process Illustrated The Trial Balance The Navigator basic equation Expansion of The Navigator Scan Study Objectives Read Preview Read Chapter Review Work Demonstration Problem Answer True-False Statements Answer Multiple-Choice Questions Match Terms and Definitions Solve Exercises
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2-2 Student Study Guide for Accounting Principles, 7th Edition _____________________________________________________________________________ CHAPTER REVIEW The Account 1. (S.O. 1) An account is an individual accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. 2. In its simplest form, an account consists of (a) the title of the account, (b) a left or debit side, and (c) a right or credit side. The alignment of these parts resembles the letter T, and therefore the account form is called a T-account. Debits and Credits 3. (S.O. 2) The terms debit and credit mean left and right, respectively. a. The act of entering an amount on the left side of an account is called debiting the account and making an entry on the right side is crediting the account. b. When the debit amounts exceed the credits, an account has a debit balance; when the reverse is true, the account has a credit balance. 4. In a double-entry system, equal debits and credits are made in the accounts for each transaction. Thus, the total debits will always equal the total credits. 5. The effects of debits and credits on assets and liabilities and the normal balances are: Accounts Debits Credits Normal Balance Assets Increase Decrease Debit Liabilities Decrease Increase Credit 6. Accounts are kept for each of the four subdivisions of owner’s equity: capital, drawings, revenues, and expenses. 7.
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This note was uploaded on 11/09/2009 for the course FINANCE 330 taught by Professor Seri during the Spring '09 term at Birzeit University.

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acc.ch2 - The Navigator Chapter 2 Scan Study Objectives...

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