Accounting 312- ch 3 - Accounting 312 Chapter 3 The...

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Accounting 312 Chapter 3- The Accounting Information System An Accounting Info System collects and processes transaction data and then disseminates the financial info to interested parties -factors affecting systems: natures of the business and the transaction in which it engages, the size of the firm, the volume of data to be handled, info demands of management and others Basic Terminology Event- a happening of consequence. An event generally is the source or cause of changes in assets, liabilities and equity. Events may be external or internal. Transaction- an external event involving a transfer or exchange btwn two or more entities. Account- a systematic arrangement that shows the effect of transactions and other events on a specific element (asset, liability, etc). Companies keep a separate acct for each asset, liability etc Real accounts- permanent, asset and liability and equity accts that appear on the BS Nominal accounts- temporary, include revenue, expense, and dividend accounts and appear on income statement (except dividends), are periodically closed Ledger- the book containing the accounts- general ledger is a collection of all the asset, liability, owners’ equity, revenue and expense accts and a subsidiary ledger contains the details related to a given general ledger account Journal- the book of original entry where the company initially records transactions and selected other events. Posting- the process of transferring the essential facts and figures from the book of original entry to the ledger accounts Trial balance- the list of all open accounts in the ledger and their balances. The trial balance taken immediately after all adjustments have been posted is called an adjusted trial balance. A trial balance taken immediately after closing entries have been posted is called a post-closing
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Accounting 312- ch 3 - Accounting 312 Chapter 3 The...

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