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DPM_3e_ch03_2003_041911

DPM_3e_ch03_2003_041911 - FINANCIAL ACCOUNTING Third...

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©Cambridge Business Publishers, 2011 Prepared by Diane Tanner Thomas R. Dyckman ■ Robert P. Magee ■ Glenn M. Pfeiffer Third Edition Chapter 3 Chapter 3 Adjusting Accounts for Adjusting Accounts for Financial Statements Financial Statements FINANCIAL ACCOUNTING
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©Cambridge Business Publishers, 2011 2 Learning Objective 1 Learning Objective 1 Identify the major steps in the accounting cycle .
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©Cambridge Business Publishers, 2011 3 Abbreviated Accounting Cycle Abbreviated Accounting Cycle A sequence of activities to accumulate and report financial statements Steps performed daily, monthly, quarterly, or end of fiscal year; not all at the same time Steps in the accounting cycle Exhibit 3.1 Continuously Continuously Annually (End of Annually (End of Accounting Accounting Period) Period) Monthly or Monthly or Quarterly Quarterly
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©Cambridge Business Publishers, 2011 4 Learning Objective 2 Learning Objective 2 Review the process of journalizing and posting transactions .
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©Cambridge Business Publishers, 2011 5 Charts of Accounts Charts of Accounts Lists the titles and numbers of all accounts found in the general ledger
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©Cambridge Business Publishers, 2011 6 Review of Accounting Documents Review of Accounting Documents General journal Tabular, chronological record where business activities are captured in debits and credits General ledger Listing of all accounts and their balances Accounts are grouped in 5 elements Assets Liabilities Equity Revenues Expenses
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©Cambridge Business Publishers, 2011 7 Journalizing and Posting Journalizing and Posting Journalize Recording a transaction in a journal Posting Occurs after transactions are journalized Debits and credits in each journal entry are transferred to their related general ledger accounts Record in Journal Post to the Ledger
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©Cambridge Business Publishers, 2011 8 Cash (+A) 12,000 Notes payable (+L) 12,000 Borrow $12,000 on a two-year note Record a Note Signed Record a Note Signed (1) On June 1, Jana Juice signed a 2-year note to borrow $12,000 and agrees to pay 12% interest on the first day of each month with the principal due at the end of 2 years. Balance Sheet Income Statement Transaction Cash Asset + Noncas h Asset = Liabilitie s + Contrib. Capital + Earned Capital Revenue s Expense s = Net income Sign note and received $12,000 cash +12,00 0 Cash = +12,00 0 Notes Payable = Cash (A) Notes Payable (L) (1) 12,000 12,000 (1)
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©Cambridge Business Publishers, 2011 9 Fixtures and equipment (+A) 10,200 Cash ( A) 10,200 Purchase fixtures and equipment for cash. Record Purchase of Long-Term Assets Record Purchase of Long-Term Assets (2) On June 1, Jana Juice purchases and installs new fixtures and equipment for $10,200. Balance Sheet Income Statement Transaction Cash Asset + Noncas h Asset = Liabilitie s + Contrib.
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