Review Notes Ch 3

Review Notes Ch 3 - CHAPTER 3 The Accounting Information...

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CHAPTER 3 The Accounting Information System Study Objectives 1. Analyze the effect of business transactions on the basic accounting equation. 2. Explain what an account is and how it helps in the recording process. 3. Define debits and credits and explain how they are used to record business transactions. 4. Identify the basic steps in the recording process. 5. Explain what a journal is and how it helps in the recording process. 6. Explain what a ledger is and how it helps in the recording process. 7. Explain what posting is and how it helps in the recording process. 8. Explain the purposes of a trial balance. 9. Classify cash activities as operating, investing, or financing. 3-1
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Chapter Outline Study Objective 1 - Analyze the Effect of Business Transactions on the Basic Accounting Equation Accounting Information System collects and processes transactions. communicates financial information to decision makers. Factors that shape the Accounting Information System include: nature of the company’s business types of transactions company size the volume of data information demands of management and others. Most businesses use computerized accounting systems, sometimes referred to as electronic data processing (EDP) systems. Accounting Transactions economic events that require recording in the financial statements occur when assets, liabilities, or stockholders’ equity items change as a result of some economic event Transaction analysis - the process of identifying the specific effects of economic events on the accounting equation A Summary of Three Important Points about Transactions: 1. Each transaction is analyzed in terms of its effect on assets, liabilities, and
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This note was uploaded on 08/18/2010 for the course ACCOUNTING 6020 taught by Professor Seki during the Spring '10 term at FAU.

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Review Notes Ch 3 - CHAPTER 3 The Accounting Information...

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