Module 3 notes

Module 3 notes - Acct 6015- Chapter 3 The Accounting Cycle...

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Acct 6015- Chapter 3 The Accounting Cycle From the beginning to the end of the fiscal year. Beginning of year Open the books. Literally. During the year Record transactions in the journal (journalize) Record them in the ledger (Post the journal entries to the ledger.) Journal entry format Date Account titles and explanations LP Debit Credit 10/19/09 Equipment 400 Cash 400 The debited account is always written first. The credited account is indented. The dollar value in the debit and credit columns must be equal. You may have more than two accounts affected by a transaction, but you must have at least one debit and at least one credit. Example of journal entry with three accounts affected: Pay off a debt and interest at the same time: 10/20 Note payable 500 Interest expense 50 Cash 550 Which accounts are debited and which are credited? Debit means LEFT and credit means RIGHT Look at the accounting equation Assets = Liabilities + Equity When assets increase you will debit them. When liabilities and equity increase you will credit them. When assets decrease – credit When liabilities decrease – debit Revenues increase equity, so revenue – credit Expenses decrease equity, so expenses – debit. You are also posting the journal entries to the ledger.
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This note was uploaded on 03/02/2010 for the course ACCT 6015 taught by Professor Satin during the Fall '09 term at CSU East Bay.

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Module 3 notes - Acct 6015- Chapter 3 The Accounting Cycle...

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