2 Accounting Records and Systems.pptx - Accounting Records and Systems Why learn basic record keeping procedures \u2022 Accounting is best learned by doing

2 Accounting Records and Systems.pptx - Accounting Records...

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Accounting Records and Systems
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4-2 Why learn basic record keeping procedures?
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4-3 The Account Device used for calculating net change Simplest form is T-account. Increases listed on one side; decreases listed on other side. Balanced periodically.
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4-4
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4-5 Temporary Accounts Revenue and expense accounts. Details of income statement and changes in retained earnings (RE). Helps summarize operating activity. Avoids cluttering RE account. At end of accounting period, amounts are totaled, combined and transferred to RE. Balances at beginning of each period are 0.
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4-6 General Ledger General ledger contains all accounts. Some accounts may be in summary form. E.g. accounts receivable, inventory, fixed assets. Detail or subsidiary ledgers kept for above.
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4-7 Chart of Accounts List of all accounts. Numbers assigned to accounts to make summaries for Balance Sheet and Income Statement easier. Minimum # is # of BS and IS lines. Usually many more. Management determines # of accounts based on information needs. May be several levels of detail. Can view as building blocks summarized in various ways.
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4-8 Debit and Credit Left hand side (LHS) of an account arbitrarily called debit side. RHS is credit side. To debit or charge (credit) means to make an entry to LHS (RHS). For each transaction: dr. (debit) = cr. (credit) Assets = Liabilities + Owners’ Equity Thus double entry bookkeeping.
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4-9 Rules for Dr. and Cr.
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