03AccountingInformationSystem

03AccountingInformationSystem - Intermediate Financial...

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Intermediate Financial Accounting I The Accounting Information System
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Accounting Cycle 2 Objectives of the Chapter I. Learning the accounting process in preparing financial statements. II. Introduce the accrual accounting concept and the adjusting entries. III.Introduce the worksheet (including the trial balance, the adjustments and the adjusted trial balance, the I/S and the B/ S columns), the preparation of financial statements from the worksheet and the closing entries.
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Accounting Cycle 3 I. Accounting Process 1.Identification and measurement of business transactions and other events; 2.Journalization (general or special journals); 3.Post (to ledger accounts and subsidiaries); 4.Prepare worksheet (including unadjusted T/ B, adjustments; adjusted T/B, I/S, B/S…); 5.Prepare financial statements;
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Accounting Cycle 4 Accounting Process (contd.) 6. Prepare and post adjusting entries; 7. Prepare and post closing entries; 8. Prepare post-closing trial balance (T/B) (optional); 9. Prepare and post reversing entries.
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The Accounting Cycle (Source: Kieso, et al., 14 th E, Illustration 3-6) Accounting Cycle 5
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Accounting Cycle 6 1. Identifying Accounting Events External Events: Purchase of assets, sales of goods, loss from flood, … Internal Events: Consumption of prepaid rent, use of depreciable assets, transfer of raw material to W-I-P, …
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Accounting Cycle 7 1. Identifying Accounting Events (contd.) Events are recognized as accounting events and would be recorded if: a. have occurred; b. affect the financial position of the business; c. can be measured in monetary terms (measurable); d. relevant, reliable.
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Accounting Cycle 8 Examples 1. Two months of prepaid insurance expired. 2. Purchase of a machine. 3. Sales of merchandise. 4. Changes in managerial policies. 5. Value of human resources. 6. The development of a new product. 7. Sign a contract to buy a building. 8. Investment from owners. 9. Distribution to owners.
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Accounting Cycle 9 2. Journalization Introduction of the Double-Entry System and Journal Entries: A. Double-entry system; B. T-account; C. Increases and decrease in the accounts.
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Accounting Cycle 10 A. Double-Entry System Each transaction affects at least two accounts and the balance of the accounting equation must be maintained. Example: Purchases inventory and charges to accounts payable. Assets = Liabilities + Equity Inventory Accounts Payable + +
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Accounting Cycle 11 A. Double-Entry System (contd.) Assets = Liabilities + Equity Revenues Expenses 1 + - 2 + + 3 + + 4 - - 5 - - 6 + + 7 - - 8 9 10
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Accounting Cycle 12 B. Introduction of the T- account Inventory Debit Credit Accounts Payable Debit Credit
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Accounting Cycle 13 Debit A Credit Credit Revenue Debit Debit Expense Credit C. Increases and Decreases in the Accounts Credit L Debit Credit E Debit
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Accounting Cycle 14 Examples of the Journal Entries: Journal Page 1 Date Accounts and Explanation Ref. Debit Credit Apr. 2 Cash…………………
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This note was uploaded on 09/08/2011 for the course ACCOUNTING 301 taught by Professor Hsieh during the Spring '11 term at S.F. State.

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03AccountingInformationSystem - Intermediate Financial...

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