ACCT CH 3

ACCT CH 3 - 3-1THE ACCOUNTING INFORMATION SYSTEMAccounting,...

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Unformatted text preview: 3-1THE ACCOUNTING INFORMATION SYSTEMAccounting, Fourth Edition33-21.Analyze the effect of business transactions on the basic accounting equation.2.Explain what an account is and how it helps in the recording process.3.Define debits and credits and explain how they are used to record business transactions.4.Identify the basic steps in the recording process.5.Explain what a journal is and how it helps in the recording process.6.Explain what a ledger is and how it helps in the recording process.7.Explain what posting is and how it helps in the recording process.8.Explain the purposes of a trial balance. 9.Classify cash activities as operating, investing, or financing.Study Objectives3-3The Accounting Information SystemAccounting Information SystemSystem ofcollectingand processingtransaction data and communicatingfinancial information to decision makers.Most businesses use computerized accounting (EDP) systems.3-4Transactionsare economic events that require recording in the financial statements.uNot all activities represent transactions.uAssets, liabilities, or stockholders equity items change as a result of some economic event.uDual effecton the accounting equation.Accounting Transactions3-5Question:Are the following events recorded in the accounting records?EventPurchase computer.CriterionIs the financial position (assets, liabilities, or stockholders equity) of the company changed?Pay rent.Record/ Dont RecordAccounting TransactionsDiscuss guided trip options with potential customer.Illustration 3-1 3-6AssetsLiabilitiesStockholders Equity=+Analyzing TransactionsSO 1 Analyze the effect of business transactions on the basic accounting equation.Basic Accounting EquationAccounting TransactionsThe process of identifying the specific effects of economic events on the accounting equation.3-7Analyzing TransactionsSO 1 Analyze the effect of business transactions on the basic accounting equation.Accounting TransactionsIllustration 3-2 Expanded accounting equation3-8Illustration:1.On October 1, cash of $10,000 is invested in Sierra Corporation by investors in exchange for $10,000 of common stock.Accounting Transactions1.SO 1 Analyze the effect of business transactions on the basic accounting equation.3-92.On October 1, Sierra borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable.Accounting Transactions1. +10,000+10,0002.SO 1 Analyze the effect of business transactions on the basic accounting equation.3-103.On October 2, Sierra purchased equipment by paying $5,000 cash to Superior Equipment Sales Co.Accounting Transactions3.1. +10,000+10,0002.+5,000+5,000SO 1 Analyze the effect of business transactions on the basic accounting equation.3-114.On October 2, Sierra received a $1,200 cash advance from R. Knox, a client....
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This note was uploaded on 09/29/2011 for the course ACCT 1003 taught by Professor Holmes during the Spring '11 term at LSU.

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ACCT CH 3 - 3-1THE ACCOUNTING INFORMATION SYSTEMAccounting,...

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