C1 Chapter 03

C1 Chapter 03 - Chapter 3 nual An eport R Processing...

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3-1 Chapter 3 Processing Accounting Information A n u a l R e p o r t Financial Accounting 1 st Canadian ed. by PNCS-B
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3-2 External vs. Internal Events external events: interaction between entity and outside environment internal events: interaction within entity
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Events vs. Transactions If an event is measurable and realized then it’s a transaction r e c o d s A u n - t i g Only transactions are recorded!
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3-4 Source Documents Evidence needed in an accounting system to record transactions Purchase Invoice Cash Register Tape Sales Invoice Receiving Document Payroll Records Shipping Document Cheques
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3-5 Assets = Liabilities + Owners’ Equity Cash Capital Stock +$100,000 = +$100,000 The accounting equation must always remain in balance Issuance of capital stock for cash - #1 Transactions for Glengarry Health Club Share Certificate
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3-6 Assets = Liabilities + Owners’ Equity Cash Note Payable - $50,000 = + $100,000 Equipment + $150,000 Acquisition of equipment in exchange for cash and note payable - #2 Increase on left has corresponding increase on right
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3-7 Assets = Liabilities + Owners’ Equity Supplies Accts. Pay. + $3,000 = + $3,000 Purchase of supplies on credit - #3 At least two accounts affected by every transaction I.O.U.
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3-8 Payment of the first six-month’s rent - #4 Assets = Liabilities + Owners’ Equity Cash -$18,000 Prepaid = (no change in Liab. or R/E) Rent + $18,000 Prepaid Rent is an asset, similar to supplies; it has future benefit.
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3-9 Revenue - Expenses = Net income (loss) Income Stmt. Stmt. of R/E Beg. R/E + Net income (or – net loss) - Dividends = End. R/E Effect of Revenue and Expenses on Retained Earnings
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3-10 Sale of day passes for cash - #5 Assets = Liabilities + Owners’ Equity Cash Retained Earnings + $15,000 = + $15,000 Revenues increase retained earnings
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3-11 Rental of studio space & court time - #6 Assets = Liabilities + Owners’ Equity Cash Retained Earnings +$5,000 = +$5,000 Revenues increase retained earnings
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3-12 Assets = Liabilities + Owners’ Equity Cash Unearned Revenue +$48,000 = +$48,000 Sale of annual memberships - #7 Receipt of annual membership payment creates liabilities
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C1 Chapter 03 - Chapter 3 nual An eport R Processing...

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