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ch03 - 3 The Accounting Information System 14thEdition 3 1...

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3-1 Intermediate Accounting 14th Edition 3 The Accounting Information System Kieso, Weygandt, and Warfield
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3-2 1. Understand basic accounting terminology. 2. Explain double-entry rules. 3. Identify steps in the accounting cycle. 4. Record transactions in journals, post to ledger accounts, and prepare a trial balance. 5. Explain the reasons for preparing adjusting entries. 6. Prepare financial statement from the adjusted trial balance. 7. Prepare closing entries. Learning Objectives Learning Objectives Learning Objectives Learning Objectives
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3-3 Collects and processes transaction data. Disseminates the information to interested parties. Accounting Information System Accounting Information System Accounting Information System Accounting Information System Accounting Information System ( AIS )
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3-4 How much and what kind of debt is outstanding? Were sales higher this period than last? What assets do we have? What were our cash inflows and outflows? Did we make a profit last period? Are any of our product lines or divisions operating at a loss? Can we safely increase our dividends to stockholders? Is our rate of return on net assets increasing? Accounting Information System Accounting Information System Accounting Information System Accounting Information System Helps management answer such questions as:
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3-5 Accounting Information System Accounting Information System Accounting Information System Accounting Information System LO 2 Explain double-entry rules. An Account shows the effect of transactions on a given asset, liability, equity, revenue, or expense account. Double-entry accounting system (two-sided effect). Recording done by debiting at least one account and crediting another. DEBITS must equal CREDITS . Debits and Credits
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3-6 Account Name Debit / Dr. Credit / Cr. Debits and Credits Debits and Credits Debits and Credits Debits and Credits An arrangement that shows the effect of transactions on an account. Debit = “Left” Credit = “Right” Account Account LO 2 Explain double-entry rules. An Account can An Account can be illustrated in a be illustrated in a T-Account form. T-Account form.
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3-7 Chapter 3-23 Assets Debit / Dr. Credit / Cr. Normal Balance Normal Balance Chapter 3-27 Debit / Dr. Credit / Cr. Normal Balance Expense Liabilities Liabilities Debit / Dr. Credit / Cr. Normal Balance Chapter 3-25 Debit / Dr. Credit / Cr. Normal Balance Normal Balance Equity Chapter 3-26 Debit / Dr. Credit / Cr. Normal Balance Revenue Normal Balance Credit Normal Balance Credit Normal Balance Debit Normal Balance Debit Debits and Credits Summary Debits and Credits Summary Debits and Credits Summary Debits and Credits Summary LO 2 Explain double-entry rules.
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3-8 The Accounting Equation The Accounting Equation The Accounting Equation The Accounting Equation LO 2 Explain double-entry rules.
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