WRD_ch02 - 2 Analyzing Transactions 1 Analyzing...

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1 2 Analyzing Transactions
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2 1-2 2-2 After studying this chapter, you should be able to: Describe the characteristics of an account and a chart of accounts . 1 Analyzing Transactions 2-2 2 Describe and illustrate journalizing transactions using the double-entry accounting system. 3 Describe and illustrate the journalizing and posting of transactions to accounts. 4 Prepare an unadjusted trial balance and explain how it can be used to discover errors.
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3 1-3 2-3 Describe the characteristics of an account and a chart of accounts. 1 2-3
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4 1-4 2-4 The T account has a title. The T Account Title 1
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5 1-5 2-5 The T Account The left side of the account is called the debit side. Title Debit 1
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6 1-6 2-6 The T Account Title Debit The right side of the account is called the credit side. Credit 1
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7 1-7 2-7 Cash (a) 25,000 (b) 20,000 (d) 7,500 (e) 3,650 (f) 950 (h) 2,000 Balance 5,900 Balance of the account 1
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8 1-8 2-8 A group of accounts for a business entity is called a ledger . 1 Chart of Accounts
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9 1-9 2-9 A list of the accounts in a ledger is called a chart of accounts . 1 Chart of Accounts
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10 1-10 2-10 Assets are resources owned by the business entity. Cash Supplies Accounts receivable Prepaid expenses Buildings 1 Chart of Accounts
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11 1-11 2-11 Liabilities are debts owed to outsiders (creditors). Accounts payable Notes payable Wages payable 1 Chart of Accounts
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12 1-12 2-12 Owner’s equity is the owner’s right to the assets of the business. A drawing account represents the amount of withdrawals by the owner. 1 Chart of Accounts
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13 1-13 2-13 Revenues are increases in owner’s equity as a result of selling services or products to customers. Fees earned Commission revenue Rent revenue 1 Chart of Accounts
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