2331 Chapters 1&2 Lazer 2010 - Part 2 - Student - 6pp

2331 Chapters 1&2 Lazer 2010 - Part 2 - Student -...

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Dr. Ron Lazer Chapters 1 & 2 (Part 2): The Financial Statements & Transaction Analysis Dr. Ron Lazer Second Quiz s Date: s Content: (specific instructions will be provided during class) s Allowed material: 4 function calculator Ron Lazer, Ph.D. Financial Accounting GAAP (General y Accepted Accounting Principles) The Accounting Information System Financial Statements Transaction Analysis Financial Statements Ron Lazer, Ph.D. Today’s class objectives The Accounting Information System Double Entry Accounting The Accounting Cycle Ron Lazer, Ph.D. How do you handle many transactions? s The transaction analysis of Kingsbery Automotive Services used a few transactions and accounts. However, with thousands of transactions and hundreds of accounts, the spreadsheet program is not sufficient. s Therefore accountants use a “double entry” system based on debits and credits. s Each transaction must still be analyzed to determine which accounts are involved, whether the accounts increase or decrease, and how much the balance will change. s The balance sheet equation can be used for this analysis, but with so many transactions, this is not realistic. s In practice, accountants use ledgers . Double-Entry Accounting s Account – a summary device b Detailed record of increases and decreases in specific assets, liabilities, or stockholders’ equity during a period b Each column under the accounting equation is an account s Ledger - a group of related accounts kept current in a systematic manner b Think of a ledger as a book with one page for each account b The ledger is a company’s “books” s Journal – the chronological record of transactions
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Dr. Ron Lazer Double-Entry Accounting T-Accounts s A simplified version of a ledger account is called the T-account . b
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2331 Chapters 1&2 Lazer 2010 - Part 2 - Student -...

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