ACG2021_ch2 - ACG2021 Financial Accounting Processing...

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1 ACG2021 Financial Accounting Processing Accounting Information
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2 The Accounting Information System Inputs Process Outputs Business Transaction 1. Accounts 2. Journal 3. General Ledger 4. Trial Balance 1) Income Statement 2) Balance Sheet 3) Cash Flow
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3 Learning Objective 1 Analyze business transactions.
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4 Accounting for Business Transactions Transaction - any event that both affects the financial position of the business entity and can be reliably recorded Reliably Recorded (2 accounting principles, what are they?)
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5 Transactions are Recorded in The Account Basic summary summary device Paper based Computer based ???? based Accounts - grouped into three broad categories Assets Liabilities Stockholders’ Equity Used to Accumulate $’s of every business transaction How much cash did we receive/spend? How much revenue did we earn? How much was spent on rent for the year?
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6 Chart of Accounts The chart of accounts lists all accounts and their account numbers. Accounts can be grouped under the financial statement headings: Balance Sheet: Assets, Liabilities, and Stockholders’ Equity Income Statement: Revenues and Expenses
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7 Example Chart of Accounts
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8 Recording Transactions (Processing) Journalizing process: Specify each account affected by the transaction Classify each account as either asset, liability, stockholders’ equity, revenue , or expense Determine whether each account is increased or decreased (use rules of debit and credit) Record the transaction in a journal with a brief explanation.
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9 The Account Assets - economic resources that benefit the business now and in the future Cash Accounts receivable Inventory Notes receivable Prepaid expenses Land Buildings Equipment, furniture, and fixtures
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10 The Account Liabilities - debts of the company o Notes payable o Accounts payable o Accrued liabilities o Long-term liabilities (bonds)
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11 The Account Stockholders’ (owners’ or shareholders’) equity - owners’ claims against the assets of a corporation o Common Stock o Retained Earnings o Revenues o Expenses
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12 Accounting for Business Transactions 1. The Lyons invest $50,000 to begin the business, and Air & Sea Travel issues common stock. Analysis of Transactions Liabilities Trans Cash Accounts Receivable Office Supplies Land Accounts payable Common Stock Retained Earnings A s s e t s = Stockholder's Equity (1) 50,000 50,000
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13 Accounting for Business Transactions 2. Air & Sea purchases land for an office location, paying $40,000 in cash Trans Cash Accounts Receivable Office Supplies Land Accounts payable Common Stock Retained Earnings (1) 50,000 50,000 (1) (40,000) 40,000 Bal 10,000 40,000 50,000
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14 Accounting for Business Transactions 3. The business buys office supplies, agreeing to pay $500 to the office- supply store within 30 days. Liabilities
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This note was uploaded on 09/16/2011 for the course ACG 2021 taught by Professor Hornik during the Spring '08 term at University of Central Florida.

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ACG2021_ch2 - ACG2021 Financial Accounting Processing...

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