ch 2 LN Accounting Cycle including financial ratios

ch 2 LN Accounting Cycle including financial ratios - Ch2:...

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2-1 Ch 2: Review of Accounting Cycle 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. 4. Distinguish between accrual and cash-basis  accounting.
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2-2 Identify and explain the basic steps in the accounting process ( accounting cycle ). OBJECTIVE 1
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2-3 Analyze transactions and make and post journal entries. OBJECTIVE 2 3-Step Journal Entry Process Identify the accounts involved with an event or  transaction. Determine whether each account increased or  decreased. Determine the amount by which each account was  affected.
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2-4 Double-Entry Accounting An old and universally accepted system for  recording accounting data. Each transaction/ business event is recorded to  maintain the equality of the basic accounting  equation: Assets = Liabilities Owners’ Equity +
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2-5 debit  is an entry on the left side of an account. Double-Entry Accounting Assets, expenses, and dividends are increased by  debits and decreased by  credits . credit  is an entry on the right side of an account. Liabilities, capital stock, retained earnings, and  revenues are increased by credits and decreased  by  debits .
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2-6
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2-7 Journalizing Transactions The  general journal  is used to record all  transactions for which a special journal is not  maintained. special journal  is used to record a particular  type of frequently recurring transaction. sales, purchases, cash disbursements, cash receipts
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2-8 Date Description Post. Ref. Debit Credit GENERAL JOURNAL Page 24 2011 July 1 Dividends 330 25,000 Dividends Payable 260 25,000 Declared semiannual cash dividend on common stock. 10 Equipment 180 7,500 Notes Payable 220 7,500 Issued note for new equipment. .
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2-9 An  account   is used to summarize the effects of  transactions on each element of the expanded  accounting equation. ledger   is a collection of accounts maintained  by a business. The transfer of information from the journal to  the appropriate account in the ledger is referred  to as  posting . Posting to the Ledger Accounts
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2-10 Posting to the Ledger Accounts Account EQUIPMENT Account No. 180 Date Item Ref. Debit Credit Balance GENERAL LEDGER (continues) 2011 July l Balance I 10,550 10 Purchase Equipment J24 7,500 18,050 Post.
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2-11 Posting to the Ledger Accounts Account No. 220 2011 July l Balance I 5,750 10 Purchase Equipment J24 7,500 13,250 GENERAL LEDGER Date Item Ref. Debit Credit Balance Post.
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