wk1-2 - Business Transactions Business Transactions 1 The...

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Unformatted text preview: Business Transactions Business Transactions 1 The Accounting Process The Accounting Process Record Transactions in the Journal Copy (post) to the Ledger Prepare the Trial Balance Account Account Basic summary device Detailed record of increases and decreases in specific assets, liabilities, or stockholders equity during a period. 3 Ledger Ledger Book or printout holding all the accounts 4 Accounting Equation Accounting Equation Accounts are grouped in 3 broad categories: 5 Liabilities Equity Assets = + Assets Assets Economic resources that will benefit the business in the future Cash Accounts Receivable Notes Receivable Prepaid Expenses Land Building Equipment, Furniture, Fixtures 6 Liabilities Liabilities Creditors claims to assets (debt) Accounts Payable Notes Payable Accrued Liabilities 7 Stockholders Equity Stockholders Equity Owners claim to the assets Common Stock Retained Earnings Dividends Revenues Expenses 8 All Individual Accounts Combined All Individual Accounts Combined Make Up the Ledger Make Up the Ledger 9 Revenues Notes Payable Accounts Receivable C. Lapp, Capital Accounts Payable Ledger Cash Chart of Accounts Chart of Accounts List of all accounts used by a company along with the account numbers 10 Double Entry System Double Entry System Record dual effects of each transaction Each transaction affects at least two accounts Each transaction is recorded with at least One debit One credit Total debits must equal total credits 11 T-Account T-Account 12 Simple tool for analyzing and determining the balance in a given account Account Name (Left Side) Debit (Right Side) Credit Rules of Debit and Credit Rules of Debit and Credit 13 Debit Credit Debit Credit Assets Assets + + --Liabilities Liabilities Equity Equity = = + + Debit Credit Debit Credit- +- + Debit Credit Debit Credit- +- + Rules of Debit and Credit Rules of Debit and Credit Stockholders Equity Stockholders Equity 14 Revenues Revenues- +- + Debit Credit Debit Credit Common Common Stock Stock Debit Credit Debit Credit- +- + Retained Retained Earnings Earnings Debit Credit Debit Credit- +- + Dividends Dividends Debit Credit Debit Credit + + --Expenses Expenses Debit Credit Debit Credit + + --Normal Balances Normal Balances 15 Liabilities Liabilities Equity Equity Assets...
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wk1-2 - Business Transactions Business Transactions 1 The...

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