Chapter 2

Chapter 2 - Chapter 2 Analyzing and Recording Transactions...

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Analyzing and Recording Transactions Chapter 2
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Learning Objective Understand the process of transforming transaction data into useful accounting information.
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Steps in an Accounting Cycle 1. Analyze and journalize economic events based on source documents. (Chap. 2) 2. Post journal entries to ledger accounts. (Chap. 2) 3. Journalize and post adjusting entries. (Chap. 3) 4. Determine account balances and prepare a trial balance. (Chap. 4) 5. Prepare financial statements. (Chap. 4) 6. Journalize and post closing entries. (Chap. 4) 7. Prepare a post-closing trial balance. (Chap. 4)
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Step 1. Analyze and Journalize Economic Events Relevance Objectivity Example: Business Transactions (exchange of assets and liabilities with other entities)
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Source Documents Examples: Sales invoice, purchase order, check stub. Source documents are used to confirm an event has occurred to establish the amounts be recorded These documents will be analyzed and used as the basis for journal entries.
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A T-account is a simplified depiction of an account in the form of letter T.
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Chapter 2 - Chapter 2 Analyzing and Recording Transactions...

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