Chapter03 - 3-1 Chapter 3 The Accounting Cycle Capturing...

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BUSI1002KLT, 07/08 3-1 The Accounting Cycle Capturing Economic Events Chapter 3
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BUSI1002KLT, 07/08 3-2 Learning Objective LO1 To identify the steps in the accounting cycle and discuss the role of accounting records in an organization.
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BUSI1002KLT, 07/08 3-3 The Accounting Cycle The sequence of procedures to record and process accounting information for the preparation of financial statements at regular intervals.
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BUSI1002KLT, 07/08 3-4 The Role of Accounting Records Establishes accountability for assets and transactions. Keeps track of routine business activities. Obtains detailed information about a particular transaction. Evaluates efficiency and performance within company. Maintains evidence of a company’s business activities.
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BUSI1002KLT, 07/08 3-5 Learning Objective LO2 To describe a ledger account and a ledger.
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BUSI1002KLT, 07/08 3-6 The Ledger The entire group of accounts is kept together in an accounting record called a ledger . Cash Accounts Payable Capital Stock Accounts are individual records showing increases and decreases .
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BUSI1002KLT, 07/08 3-7 The Use of Accounts Increases are recorded on one side of the T- account, and decreases are recorded on the other side. Left or Debit Side Right or Credit Side Title of the Account
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BUSI1002KLT, 07/08 3-8 Let’s see how debits and credits are recorded in the Cash account for JJ’s Lawn Care Service.
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BUSI1002KLT, 07/08 3-9 Cash 5/1 8,000 5/2 2,500 5/25 75 5/8 2,000 5/29 750 5/28 150 5/31 50 5/31 4,125 Bal. Receipts are on the debit side. Payments are on the credit side. The balance is the difference between the debit and credit entries in the account. Debit and Credit Entries
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BUSI1002KLT, 07/08 3-10 Learning Objective LO3 To understand how balance sheet accounts are increased and decreased.
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BUSI1002KLT, 07/08 3-11 A A = L L + OE OE ASSETS ASSETS Debit for Increase Credit for Decrease EQUITIES EQUITIES Debit for Decrease Credit for Increase LIABILITIES LIABILITIES Debit for Decrease Credit for Increase Debits and credits affect accounts as follows: Debit and Credit Rules
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BUSI1002KLT, 07/08 3-12 Learning Objective LO4 To explain the double- entry system of accounting.
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BUSI1002KLT, 07/08 3-13 A A = L L + OE OE Debit Debit balances balances Credit Credit balances balances = In the double-entry accounting system, every transaction is recorded by equal dollar amounts of debits and credits. Double Entry Accounting The Equality of Debits and Credits
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BUSI1002KLT, 07/08 3-14 Let’s record selected transactions for JJ’s Lawn Care Service in the accounts.
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BUSI1002KLT, 07/08 3-15 May 1: Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock. Will Cash increase or decrease? Will Capital Stock increase or decrease?
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BUSI1002KLT, 07/08 3-16 Capital Stock 5/1 8,000 Cash 5/1 8,000 May 1: Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock.
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Chapter03 - 3-1 Chapter 3 The Accounting Cycle Capturing...

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